Embed Size (px)
Citation preview
International Merchandise Trade Statistics:
Compilers Manual, Revision 1
(IMTS 2010-CM)
United Nations
Department of Economic and Social Affairs
Statistics Division
International Merchandise Trade Statistics:
Compilers Manual, Revision 1
(IMTS 2010-CM)
United Nations
New York, 2013
ii
Department of Economic and Social Affairs
The Department of Economic and Social Affairs of the United Nations Secretariat is a vital
interface between global policies in the economic, social and environmental spheres and national
action. The Department works in three main interlinked areas: (i) it compiles, generates and
analyses a wide range of economic, social and environmental data and information on which
States Members of the United Nations draw to review common problems and to take stock of
policy options; (ii) it facilitates the negotiations of Member States in many intergovernmental
bodies on joint courses of action to address ongoing or emerging global challenges; and (iii) it
advises interested Governments on the ways and means of translating policy frameworks
developed in United Nations conferences and summits into programmes at the country level and,
through technical assistance, helps build national capacities.
Note
The designations employed and the presentation of material in the present publication do not
imply the expression of any opinion whatsoever on the part of the Secretariat of the United
Nations concerning the legal status of any country, territory, city or area, or of its authorities,
or concerning the delimitation of its frontiers or boundaries.
The term ―country‖ as used in the text of this publication also refers, as appropriate, to
territories or areas.
iii
The designations ―developed‖ and ―developing‖, as applied to countries or areas, and ―more
developed‖, ―less developed‖ and ―least developed‖, as applied to regions, are intended for
statistical convenience and do not necessarily express a judgement about the stage reached by
a particular country or area in the development process.
Symbols of United Nations documents are composed of letters combined with figures.
ST/ESA/STAT/SER.F/87/Rev. 1
United Nations Publication
Sales No. E.13.XVII.8
ISBN-13 978-92-1-161569-2
eISBN 978-92-1-055989-8
Copyright © United Nations, 2013
All rights reserved
Preface
The present publication, International Merchandise Trade Statistics: Compilers Manual,
Revision 1 (IMTS 2010-CM), has been prepared in accordance with a decision taken by the
Statistical Commission at its forty-first session, held in New York from 23 to 26 February 2010.1
In that decision, the Commission adopted International Merchandise Trade Statistics: Concepts
and Definitions 2010 (IMTS 2010)2 and endorsed the proposed implementation programme,
including the preparation of the revised IMTS Compilers Manual (IMTS 2010-CM).
The provisional draft of IMTS 2010-CM was prepared by the United Nations Statistics
Division, in cooperation with members of the Expert Group on International Merchandise Trade
Statistics and the inter-agency Task Force on International Merchandise Trade Statistics. It
incorporates inputs from national statistical offices, customs administrations and other
governmental agencies of various countries, as well as from international, supranational and
regional organizations, received during a worldwide consultation, three virtual meetings of the
Expert Group and a specially organized meeting on compilation issues of IMTS 2010, held from
6 to 9 December 2011. The draft was reviewed and endorsed by the Expert Group at its fourth
virtual meeting on the update of the Manual, held from 20 December 2011 to 19 January 2012.
At its forty-third session, held in New York from 28 February to 2 March 2012, the
Statistical Commission took note of the report of the Secretary-General on international
merchandise trade statistics (E/CN.3/2012/22) which introduced IMTS 2010-CM, and, thereby
endorsed IMTS 2012-CM for use.3 The draft text of IMTS 2010-CM was itself provided to the
Commission as a background document for information.
IMTS 2010-CM is the cornerstone of the United Nations Statistics Division action plan
for the implementation of IMTS 2010. The Manual contains further and more detailed
explanation of certain recommendations and provides practical guidance for compilers by
describing good or best practices applicable under different circumstances. The Manual
promotes the adherence to good practices and recommends specific solutions to compilation
issues related to international merchandise trade statistics. To assist in the identification of such
practices, the Manual uses wording such as ―it is good practice‖, ―countries are advised to‖ or
―countries could‖. The Manual is consistent with IMTS 2010, which is the internationally agreed
standard for international merchandise trade statistics, and does not introduce any new
recommendation or encouragement in addition to those contained in IMTS 2010.
The structure of IMTS 2010-CM is largely similar to that of the original Compilers
Manual of 2004,4 and the updates respond to the need to (a) incorporate guidance on the
implementation of new recommendations and encouragements contained in IMTS 2010 and (b)
reflect any new or updated country practices. The structure of IMTS 2010-CM follows the logic
of the data compilation process.
Great efforts have been undertaken to reflect current practices and information. However,
since country practices change over time, the information provided in this Manual is a reflection
of the information available to the authors at the time of drafting.
1 See Official Records of the Economic and Social Council, 2010, Supplement No. 4 (E/2010/24), chap. I, sect. B,
decision 41/103. 2 United Nations publication, Sales No. E.10.XVII.13.
3 See Official Records of the Economic and Social Council, 2012, Supplement No. 4 (E/2012/24), chap. I, sect. B,
decision 43/117. 4 United Nations publication, Sales No. E.02.XVII.17.
vi
Acknowledgements
International Merchandise Trade Statistics: Compilers Manual, Revision 1 (IMTS 2010-CM)
was prepared by the United Nations Statistics Division in collaboration with the members of the
Expert Group on International Merchandise Trade Statistics (EG-IMTS) listed in alphabetical
order of countries and organizations: Brazil (P. Pavao and F. Martins Pimentel), Canada
(A. Torrance), China (H. Jin), Colombia (J. F. Martínez), Costa Rica (A. M. Umaña), Czech
Republic (V. Petraskova), Germany (K. Geyer-Schaefer, A. Krockow and S. Gehle-Dechant),
Italy (S. Menghinello and P. Anitori), Jamaica (L. Reid), Mexico (G. A. Durand Alcántara and
P. Álvarez Icaza Longoria), Morocco (H. Ouljour), Norway (L. Korbol), Philippines
(E. de Guzman), Uganda (J. Mayende), Ukraine (V. Pischeiko and L. Matronich), United
Kingdom (M. Kingston and S. Tudor), United States of America (D. Dickerson and D. Oberg)
and Viet Nam (T. M. T. Le); and Common Market for Eastern and Southern Africa (COMESA)
(A. J. Walakira), Customs Union Commission (Belarus, Kazakhstan and Russian Federation)
(E. Borushko), Eurostat (K. Nuortila and A. Ridzonova), Food and Agriculture Organization of
the United Nations (FAO) (M. Campeanu), Organization for Economic Cooperation and
Development (OECD) (A. Lindner), United Nations Conference on Trade and Development
(UNCTAD) (M. Muryawan), Universal Postal Union (UPU) (M. Helble), World Customs
Organization (WCO) (E. De Jong), World Trade Organization (WTO) (A. Maurer and
Y. Markus), United Nations Statistics Division, Department of Economic and Social Affairs of
the United Nations Secretariat (R. Jansen, M. Reister, L. González Morales, C.S. Lovell and
V. Markhonko as consultant).
The United Nations Statistics Division is grateful to the members of EG-IMTS for their
fruitful collaboration. Their valuable contributions throughout the drafting of the
recommendations and during four virtual meetings of EG-IMTS and the meeting on compilation
issues of IMTS 2010 are highly appreciated. The Division is also grateful to the Task Force on
International Merchandise Trade Statistics (TF-IMTS),1 which supported the revision process at
its various stages.
The United Nations Statistics Division also wishes to express its appreciation to national
statistical offices, customs administrations and other governmental agencies for their numerous
and often very detailed comments provided during the worldwide consultations on the contents
of IMTS 2010-CM, which provided important input and guidance for the successful completion
of the drafting process.
The preparation of IMTS 2010-CM commenced under V. Markhonko and continued
under the guidance and supervision of R. Jansen. M. Reister, V. Markhonko (as consultant), R.
Jansen, L. González Morales and C.S. Lovell were involved in the drafting of the text at various
stages of the revision process. M. Reister was directly responsible for the organization of the
virtual meetings of EG-IMTS, the worldwide consultation, the meeting on compilation issues of
IMTS 2010 and, with the assistance of L. González Morales, the preparation of the final text.
1 TF-IMTS is an inter-agency body comprising of representatives of: United Nations Statistics Division, Economic
Commission for Latin America and the Caribbean, Economic and Social Commission for Western Asia, United
Nations Conference on Trade and Development, United Nations Industrial Development Organization, Food and
Agriculture Organization (FAO), International Monitory Fund (IMF), World Trade Organization, International
Trade Centre, Organization for Economic Co-operation and Development (OECD), Eurostat and World Customs
Organization (WCO).
vii
Throughout the revision process, the staff of the International Merchandise Trade Statistics
Section, United Nations Statistics Division, provided valuable support.
viii
ix
Contents
Preface……………………………………………………………………………..………..….. v
Acknowledgments……………………………………………………………………………… vi
List of country experiences……………………………………………………………………xvii
Abbreviations and acronyms………………………………………………………………....xxvi
PART ONE. LEGAL FRAMEWORK AND DATA SOURCES ............................................................................. 1
I. THE LEGAL FRAMEWORK FOR IMTS ........................................................................................ 3
A. Importance of the legal framework for trade statistics ................................................. 3
B. Legal acts governing customs records .......................................................................... 4
C. Legal acts regulating non-customs data sources .......................................................... 6
D. Legal acts regulating institutional arrangements ......................................................... 7
E. Legal acts protecting confidentiality of traders and trade information ....................... 7
F. Country experiences...................................................................................................... 8
II. CUSTOMS DECLARATIONS AND RELATED CUSTOMS RECORDS .............................................. 11
A. Customs declarations as the most prevalent source of trade data ............................. 11
B. Structure and content of the revised Kyoto Convention ............................................. 13
C. Customs procedures and IMTS ................................................................................... 15
D. Verification of the declared information..................................................................... 21
E. Lodgement of the customs declarations and related data-collection issues ............... 22
F. Information required to complete a goods declaration .............................................. 24
Annex II.A. The single administrative document (SAD) ..................................................... 26
III. NON-CUSTOMS DATA SOURCES ................................................................................................. 27
A. Overview ..................................................................................................................... 27
B. Main types of non-customs data sources and their uses ............................................. 28
C. Country experiences.................................................................................................... 33
Annex III.A Country practices in the use of different data sources .................................... 35
IV. ENTERPRISE AND OTHER SURVEYS .......................................................................................... 37
A. General description of enterprise and other surveys .................................................. 37
x
B. Organization of the surveys ........................................................................................ 38
C. Advantages and disadvantages of surveys .................................................................. 40
D. Examples of enterprise surveys conducted to collect missing trade data ................... 40
E. Examples of enterprise surveys conducted to obtain additional information............. 42
PART TWO. DATA COMPILATION ............................................................................................................. 45
V. INSTITUTIONAL ARRANGEMENTS ............................................................................................. 47
A. Purposes of institutional arrangements ...................................................................... 47
B. Characteristics of effective institutional arrangements .............................................. 48
C. Main types of institutional arrangements ................................................................... 49
D. Towards improved institutional arrangements ........................................................... 52
E. Institutional arrangements and data quality............................................................... 55
Annex V.A Institutional arrangements and the Automated Export System (AES): experience
of the United States of America .................................................................................. 58
Annex V.B. Institutional arrangements for foreign trade statistics: experience of Mexico .....
......................................................................................................................... 59
Annex V.C. Integrated Foreign Trade System of Brazil: institutional arrangements ......... 61
Annex V.D. Inter-Agency Committee (IAC) on Trade in Goods of the Philippines:
institutional arrangements .......................................................................................... 63
Annex V.E. Experience of China: customs as the responsible agency ............................... 64
VI. STATISTICAL TERRITORY AND ORGANIZATION OF DATA COLLECTION ................................ 65
A. Statistical territory ...................................................................................................... 65
B. Detailed description of the elements of the statistical territory .................................. 66
C. Organization of data collection with respect to different territorial elements ........... 71
VII. INTEGRATION OF DATA FROM DIFFERENT SOURCES .............................................................. 75
A. Advantages and limitations of customs and non-customs data sources ..................... 75
B. Issues encountered when merging data from different sources .................................. 77
C. Possible approaches and solutions when merging data from different sources ......... 78
xi
D. Examples of the merging of data from other administrative sources with customs data
......................................................................................................................... 79
E. Examples of the merging of Uganda’s data from enterprise surveys with customs data
......................................................................................................................... 80
F. Integrated approach to economic statistics ................................................................ 81
VIII. DATA PROCESSING AND DATABASE MANAGEMENT ................................................................ 83
A. Basic concepts ............................................................................................................. 83
B. Data processing and database management at customs ............................................ 84
C. Data processing and database management at the responsible agency ..................... 89
D. Data fields required for statistical purposes .............................................................. 92
IX. DATA QUALITY: ASSURANCE, MEASUREMENT AND REPORTING ............................................ 97
A. Quality assurance ....................................................................................................... 97
B. Quality measurement and reporting ......................................................................... 103
C. Reconciliation studies, cross-country comparability and bilateral data exchanges 108
D. Inter-agency collaboration on data quality .............................................................. 112
Annex IX.A. Statistical data validation system of Brazil (example for exports) ............... 114
Annex IX.B. Automated System for Customs Data (ASYCUDA) data quality assurance,
measurement and reporting: controls and reports ................................................... 117
Annex IX.C. Data reconciliation: reasons for differences and further guidance ............. 119
Annex IX.D. Conduct of reconciliation studies: the experience of Brazil ........................ 123
X. DATA COMPILATION IN A CUSTOMS UNION ........................................................................... 127
A. Main types of customs unions and their implications for trade data compilers ....... 127
B. Current challenges and good practices in the organization of data compilation .... 134
C. Longer-term strategies .............................................................................................. 134
D. Further possibilities in multi - country data exchanges ........................................... 135
XI. INTEGRATING TRADE AND BUSINESS STATISTICS .................................................................. 137
A. Integrated approach to economic statistics .............................................................. 137
B. Benefits of integrating trade and business statistics ................................................. 140
xii
C. Integrating trade and business statistics in data compilation: possibilities and
examples .................................................................................................................... 140
D. Ensuring the quality of the linked data sources and of the linked/integrated data .. 142
E. Generation and dissemination of additional information: possibilities and examples ..
....................................................................................................................... 145
F. Required institutional and working arrangements ................................................... 146
PART THREE. COMPILATION OF PARTICULAR DATA ITEMS ................................................................ 149
XII. TIME OF RECORDING .............................................................................................................. 151
A. Basic concepts and data sources: an overview......................................................... 151
B. Determination of the time of recording and customs territory ................................. 153
C. Use of the lodgement of the customs declarations for determining the time of
recording ................................................................................................................... 153
D. Use of non-customs data sources .............................................................................. 155
XIII. HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM (HS) ............................. 157
A. Recommendation on using HS .................................................................................. 157
B. Overview ................................................................................................................... 158
C. 2012 edition of the Harmonized System (HS12) ....................................................... 159
D. Application of Harmonized System for coding traded goods ................................... 162
E. Measures to ensure proper classification ................................................................. 167
F. Country experiences in the use of HS ....................................................................... 168
XIV. VALUATION .............................................................................................................................. 173
A. Statistical value and its components: an overview ................................................... 173
B. Compilation of the statistical value of imported goods ............................................ 176
C. Emerging good practices in the compilation of free on board (FOB)-type value of
imported goods.......................................................................................................... 180
D. Compilation of statistical values of exported goods ................................................. 182
E. Valuation of selected categories of imported and exported goods ........................... 185
F. Issues of currency recording and conversion ........................................................... 187
xiii
XV. QUANTITY MEASUREMENT ..................................................................................................... 191
A. An overview of the World Customs Organization standard units of quantity .......... 191
B. Compilation of quantity data from customs sources and non-customs sources ....... 195
C. Factors with which to convert from non-standard to standard units of quantity ..... 197
D. Quality issues ............................................................................................................ 198
E. Estimation and imputation of quantity data.............................................................. 199
Annex XV.A. Mathematical conversion factors ................................................................ 201
Annex XV.B. Quantity conversion factors used by the United Nations Statistics Division to
convert volume (V) and number/units (N) to weight (W), for selected categories of
goods ....................................................................................................................... 202
XVI. PARTNER COUNTRY ................................................................................................................. 205
A. Recommendations of IMTS 2010 .............................................................................. 205
B. Country of origin and its use in import statistics ...................................................... 205
C. Use of country of last known destination in export statistics .................................... 211
D. Use of country of consignment in import and export statistics ................................. 212
E. Definitions of partner country in trade between members of a customs union ........ 214
F. Partner-country coding for statistical purposes ....................................................... 215
XVII. MODE OF TRANSPORT (MOT) ................................................................................................. 217
A. Basic concepts ........................................................................................................... 217
B. Implementation and data sources ............................................................................. 218
C. Country practices in the compilation of trade statistics by MoT .............................. 220
D. Experiences in the dissemination of international merchandise trade statistics by MoT
....................................................................................................................... 222
Annex XVII.A. Description of modes of transport for IMTS purposes ............................ 225
XVIII. CUSTOMS PROCEDURE CODES ................................................................................................ 227
A. Customs procedure code as a new data field............................................................ 227
B. IMTS 2010 recommendation ..................................................................................... 228
C. Importance of compilation and international reporting ........................................... 228
xiv
D. Customs procedures applied by countries ................................................................ 229
Annex XVIII.A. Harmonization of customs procedure codes in the Common Market for
Eastern and Southern Africa (COMESA) ................................................................. 232
Annex XVIII.B. Nature of transaction codes for Extrastat ............................................. 236
PART FOUR. COMPILATION OF DATA ON TRADE IN SELECTED CATEGORIES OF GOODS ................... 239
XIX. SCOPE OF IMTS....................................................................................................................... 241
A. The general guideline ............................................................................................... 241
B. Comparison of specific categories of goods ............................................................. 241
C. Economic territory and categories of goods ............................................................. 245
D. Cross-border trade and smuggling ........................................................................... 246
E. Customs and statistical threshold; treatment of non-response ................................. 247
F. Confidential data and incomplete coverage due to data omission ........................... 248
XX. GOODS FOR PROCESSING ........................................................................................................ 251
A. Definition and examples of goods for processing ..................................................... 251
B. Transactions and activities that are not goods for processing ................................. 253
C. Treatment of goods for processing in the 2008 SNA/ BPM6 .................................... 254
D. Identifying trade in goods for processing, with or without change of ownership, and
the implications for the balance-of-payments compilation ....................................... 255
E. Country experiences.................................................................................................. 256
F. Additional issues ....................................................................................................... 258
XXI. GOODS THAT CROSS BORDERS AS A RESULT OF TRANSACTIONS BETWEEN RELATED
PARTIES 259
A. Definition of “related parties” and examples of trade between related parties ...... 259
B. Purposes of identifying trade between related parties (including valuation) ........... 260
C. Means of obtaining information on trade between related parties........................... 261
D. Good practices .......................................................................................................... 262
XXII. PIPELINE TRADE AND TRADE THROUGH FIXED POWER LINES ............................................. 265
A. Characteristics of trade in electricity, gas, oil and water ........................................ 265
xv
B. Data sources and compilation issues ........................................................................ 266
C. Country experiences.................................................................................................. 267
Annex XXII.A. Experience of Italy in the production of external trade statistics on natural
gas and electricity ..................................................................................................... 269
XXIII. SHIPS AND AIRCRAFT .............................................................................................................. 273
A. Difficulties encountered in the measurement of trade in ships and aircraft ............. 273
B. Existing possibilities for obtaining information on the trade in ships and aircraft . 275
C. Improving the international measurement of trade in ships and aircraft ................. 277
D. Leasing of ships and aircraft .................................................................................... 278
E. Country experiences in the compilation of data on trade in ships and aircraft ....... 280
Annex XXIII.A. Compilation of data on external trade in ships and aircraft: experience of
Italy ................................................................................................................. 281
Annex XXIII.B. Compilation of data on external trade in ships and aircraft: experience of
Norway ................................................................................................................. 283
XXIV. OTHER SPECIAL CATEGORIES OF GOODS AND COMPILATION FOR NATIONAL ACCOUNTS
AND BALANCE-OF-PAYMENTS PURPOSES ............................................................................... 285
A. Goods to be recorded similarly in IMTS and BPM6/National Accounts.................. 285
B. Goods to be recorded differently in IMTS and BPM6/national accounts ................ 288
C. Common metadata to be provided by IMTS and balance-of-payments compilers ... 290
PART FIVE. METADATA AND DISSEMINATION ........................................................................................ 293
XXV. METADATA .............................................................................................................................. 295
A. Basic concepts ........................................................................................................... 295
B. Presentation and dissemination of metadata ............................................................ 296
C. Metadata items relevant for international merchandise trade statistics .................. 298
D. Country practices ...................................................................................................... 299
XXVI. DISSEMINATION ....................................................................................................................... 303
A. Role of data and metadata dissemination ................................................................. 303
B. Factors to consider in data and metadata dissemination ......................................... 303
xvi
C. Combined presentation of statistics on external trade in goods and services .......... 315
XXVII. OTHER INTERNATIONAL CLASSIFICATIONS RELEVANT TO TRADE STATISTICS .................. 317
A. Standard International Trade Classification, Revision 4 ......................................... 317
B. Central Product Classification ................................................................................. 320
C. Classification by Broad Economic Categories ......................................................... 321
D. International Standard Industrial Classification of All Economic Activities (ISIC) 322
E. Correspondence and conversion tables and their use .............................................. 325
PART SIX. EXTERNAL TRADE INDICES AND SEASONALLY ADJUSTED DATA ........................................ 327
XXVIII. EXTERNAL TRADE INDICES ..................................................................................................... 329
A. General overview ...................................................................................................... 329
B. Data sources and measurement approaches ............................................................ 330
C. Challenges in the application of various approaches............................................... 331
D. Methodological issues ............................................................................................... 332
E. Other issues ............................................................................................................... 335
F. Country experiences.................................................................................................. 336
Annex XXVIII.A. Experience of Norway ......................................................................... 339
Annex XXVIII.B. Experience of Canada ......................................................................... 343
XXIX. SEASONAL ADJUSTMENT ......................................................................................................... 345
A. Basic concepts and uses of seasonally adjusted trade data ...................................... 345
B. Preliminary treatment of data prior to seasonal adjustment .................................... 346
C. Seasonal adjustment.................................................................................................. 347
D. Revision policies ....................................................................................................... 347
E. Quality of seasonal adjustment ................................................................................. 348
F. Specific issues ........................................................................................................... 348
G. Data presentation...................................................................................................... 349
H. Country examples...................................................................................................... 349
xvii
List of country experiences
PART ONE. LEGAL FRAMEWORK AND DATA SOURCES
I. The legal framework for IMTS
United States of
America
National laws and regulations: the experience of
the United States of America
Paragraph 1.6
United States of
America
United States Code: Title 13 entitled, “Census” Box I.1
Canada Access to information: experience of Canada Paragraph 1.7
Canada Excerpt from the Statistics Act of Canada Box I.2
Morocco The legal framework for trade statistics in
Morocco
Paragraph 1.16
Philippines The Confidentiality Act of the Philippines Paragraph 1.17
II. Customs declarations and related customs records
Brazil and Canada Use of the drawback procedure: experiences of
Brazil and Canada
Box II.5
Philippines Training and advocacy efforts: experience of the
Philippines
Box II.6
European Union,
Iceland, Norway
and Switzerland
The single administrative document (SAD) Annex II.A
III. Non-customs data sources
United States of
America
Example of United States of America: obtaining
information on goods transactions through postal
and courier services
Paragraph 3.26
Mexico Example from Mexico: administrative and
company records as non-customs sources
Paragraph 3.27
Norway Examples from Norway: use of ships registers Paragraph 3.28
IV. Enterprise and other surveys
Uganda Experience of Uganda: Informal Cross Border
Trade Surveys
Box IV.1
Turkey Example from Turkey: survey of the shuttle trade Box IV.2
China, Hong Kong
SAR
Survey on Insurance and Freight Costs for Import
Trade
Paragraph 4.18
xviii
China, Hong Kong
SAR
Survey on trade involving Outward Processing of
China, Hong Kong SAR, in the Mainland of
China
Paragraph 4.19
PART TWO: DATA COMPILATION
V. Institutional arrangements
Germany Administrative agreement between the Federal
Statistical Office (FSO) (the responsible agency)
and the Federal Fiscal Authority (FFA) of
Germany
Box V.1
Canada Table of contents of the Statistics Canada/
Canada Border Services Agency (CBSA)
Memorandum of Understanding
Box V.2
Brazil Experience of Brazil in the division of work on
trade data quality
Box V.3
Canada Responsibilities for quality assurance: experience
of Canada
Box V.4
Italy Cooperation between the Italian National
Statistical Institute (ISTAT) and the National
Customs Authority, in particular on data quality
Box V.5
United States of
America
Institutional arrangements and the Automated
Export System (AES): experience of the United
States of America
Annex V.A.
Mexico Institutional arrangements for foreign trade
statistics: experience of Mexico
Annex V.B.
Brazil Integrated Foreign Trade System of Brazil:
institutional arrangements
Annex V.C.
Philippines Inter-Agency Committee (IAC) on Trade in
Goods of the Philippines: institutional
arrangements
Annex V.D.
China Experience of China: Customs as the responsible
agency
Annex V.E.
VI. Statistical territory and organization of data collection
European Union European Union practices concerning specific
territorial elements
Box VI.2
Brazil The export processing zone: An example from
Brazil
Box VI.3
VII. Integration of data from different sources
Uganda Uganda: use of data of the commodity authority Paragraph 7.15
Norway Norway – use of ship registers Paragraph 7.16
Uganda Uganda: Informal Cross Border Trade Survey Paragraphs 7.17-7.18
xix
Turkey Turkey: survey for the shuttle trade Paragraph 7.19
VIII. Data processing and database management
Sweden Existing single widow in Sweden Paragraph 8.12
United States of
America
Customs modernization in the United States of
America
Paragraph 8.13
Philippines Experience of the Philippines: Electronic-to-
Mobile (e2m) Customs Project
Paragraph 8.14
Brazil Experience of Brazil: Sistema Integrado de
Comércio Exterior (SISCOMEX)
Paragraph 8.15
UNCTAD Automated System for Customs Data (ASYCUDA) Paragraph 8.16-8.17
Italy The statistical production process: example from
Italy
Box VIII.1
European Union Eurotrace software: data-processing software for
external trade statistics
Paragraph 8.21
Trinidad and
Tobago
Eurotrace applied in Trinidad and Tobago Paragraph 8.22
Philippines Experience of the Philippines Paragraph 8.24
IX. Data quality: assurance, measurement and reporting
United States of
America
Effect of mandatory electronic filing on export
data: experience of the United States of America
Paragraph 9.16
Brazil Statistical quality assurance in the case of Brazil Paragraph 9.17
UNCTAD ASYCUDA: Data quality assurance,
measurement and reporting
Paragraph 9.18
European Union Harmonized framework for data validation:
Eurostat
Paragraphs 9.19-9.21
European Union Validation rules of the Eurotrace DBMS Paragraph 9.22
European Union Guidelines for the production of quality reports in
the ESS
Paragraph 9.24-9.27
Germany Quality report of Germany Paragraph 9.29
United States of
America
United States merchandise trade statistics quality
report
Paragraph 9.30
European Union Eurostat merchandise trade statistics quality
report
Paragraph 9.31
European Union European Statistical System: Euro-SDMX
Metadata Structure
Paragraph 9.32
IMF IMF SDDS on international merchandise trade Paragraph 9.33
European Union Individual assessment reports for EU member
States
Paragraph 9.35
xx
United Kingdom of
Great Britain and
Northern Ireland
Information on quality measurement: United
Kingdom of Great Britain and Northern Ireland
Paragraph 9.40
Canada, Mexico
and United States of
America
Reconciliations studies: a few examples–
experience of Canada-Mexico-United States
Paragraph 9.47
United States of
America and China
Reconciliations studies: a few examples–United
States and China
Paragraph 9.47
Sweden and
Denmark
Reconciliations studies: a few examples–Sweden
and Denmark: asymmetry exchange project
Paragraph 9.47
European Union Reconciliations studies: a few examples–
European Union: asymmetries in the intra-EU
trade flows
Paragraph 9.47
Brazil Reconciliations studies: a few examples–Brazil Paragraph 9.47
United States of
America and
Canada
Bilateral data exchange: example of the United
States and Canada
Paragraph 9.49
Brazil Statistical data validation system of Brazil
(example for exports)
Annex IX.A
UNCTAD Automated System for Customs Data (ASYCUDA)
data quality assurance, measurement and
reporting: controls and reports
Annex IX.B
Brazil Conduct of reconciliation studies: the experience
of Brazil
Annex IX.D
X. Data compilation in a customs union
European Union European Union: customs unions as a single
market
Paragraphs 10.2-10.10
SACU Southern African Customs Union (SACU) Paragraph 10.11
COMESA Common Market for Eastern and Southern Africa
(COMESA)
Paragraph 10.12
ASEAN Association of Southeast Asian Nations (ASEAN) Paragraphs 10.13-10.14
Belarus,
Kazakhstan and
Russian Federation
Customs Union of Belarus, Kazakhstan and the
Russian Federation
Paragraph 10.15
Belarus,
Kazakhstan and
Russian Federation
Example of the Customs Union of Belarus,
Kazakhstan and the Russian Federation
Box X.3
European Union Example of the European Union: single
authorization (SA), single authorization for
simplified procedures (SASP) and centralized
customs clearance (CCC)
Paragraphs 10.25-10.26
xxi
XI. Integrating trade and business statistics
Italy The taxonomy of statistical outputs developed by
Italy
Paragraph 11.11
Italy New statistics and future developments in Italy Paragraph 11.12
Brazil Linking trade and business statistics: experience
of Brazil
Paragraph 11.13
OECD–European
Union
OECD-Eurostat Trade by Enterprise
Characteristics (TEC) database
Paragraphs 11.14 and
11.18
United States of
America
Linking data sources: matching rates–experience
of the United States of America
Paragraph 11.15
European Union Linking of trade operator with the statistical unit
– experience of the European Union
Paragraph 11.16
European Union Business registers – experience of the European
Union
Paragraph 11.17
Brazil Trade statistics as part of a geospatial
information system
Paragraph 11.22
PART THREE: COMPILATION OF PARTICULAR DATA ITEMS
XII. Time of recording
Brazil Time of recording in Brazil Box XII.1
European Union European Union experience on time of recording Box XII.2
XIII. Harmonized Commodity Description and Coding System (HS)
European Union Examples of the use of chapters 98 and 99 in the
Combined Nomenclature (CN) of the European
Union
Box XIII.8
European Union European Union experience in the development
and use of the Combined Nomenclature
Box XIII.9
Canada Stand-alone commodity descriptors: Canada Box XIII.10
European Union Relationship between HS, the European Union
Combined Nomenclature and other international
classifications relevant to trade statistics
Box XIII.11
XIV. Valuation
Philippines The practice of the Philippines in computing the
FOB value of imports
Box XIV.1
European Union Experience of Eurostat in distinguishing
customized and regular software
Box XIV.2
Italy Experience of Italy in distinguishing customized
and regular software
Box XIV.3
Germany Currency Conversion: experience of Germany Paragraph 14.39
xxii
Brazil Currency conversion: experience Brazil Paragraph 14.40
European Union Experience of the European Union on currency
conversion using different exchange rates for
customs data and in Intrastat
Box XIV.4
XV. Quantity measurement
European Union Practices in the application of the supplementary
units in the European Union
Paragraph 15.6
European Union Supplementary units of the Combined
Nomenclature (CN) used in EU member States
Box XV.1
China Definition of “net weight” adopted by China Box XV.2
European Union Definition of “net weight” (mass) used in the
European Union
Box XV.3
European Union Compilation of quantity information in the
Intrastat system of the European Union
Box XV.4
Norway Norway: direct reporting of quantity of exports of
petroleum products
Box XV.5
Uganda Uganda: quantity units used in the Informal
Cross Border Trade survey
Box XV.6
United States of
America
The approach of the United States of America to
validation of quantity data
Box XV.7
Germany Estimation of quantity data: current practice in
Germany
Paragraph 15.19
Canada Unit value editing and quantity imputation: the
experience of Canada
Paragraph 15.20
UNSD Estimation methods used by UNSD for UN
Comtrade
Paragraph 15.21
XVI. Partner country
European Union Partner attribution according to the community
concept: Example from the European Union
Paragraph 16.37
XVII. Mode of transport
United States of
America
Country practice: United States of America Paragraph 17.15
Canada Country practice: Canada Paragraph 17.16
Mexico Country practice: Mexico Paragraph 17.17
Germany Country practice: Germany Paragraph 17.18
Brazil Country practice: Brazil Paragraph 17.19
United States of
America
Quality assurance in the United States of America Paragraph 17.21-17-22
xxiii
United States of
America
Experience of the United States of America in the
dissemination of international merchandise trade
statistics by mode of transport
Paragraph 17.23
Canada, Mexico
and United States
North American Transportation Statistics Online
Database (NATS-OD)
Box XVII.1
XVIII. Customs procedure codes
China Customs regime codes used in merchandise trade
statistics of China
Paragraph 18.9
Philippines Customs procedure codes (CPC) used in the
Philippines
Paragraph 18.10
COMESA Harmonization of customs procedure codes in
COMESA
Paragraph 18.11 and
Annex XVIII.A
European Union European Union practice Paragraph 18.12 and
Annex XVIII.B
PART FOUR: COMPILATION OF DATA ON TRADE IN
SELECTED CATEGORIES OF GOODS
XIX. Scope of IMTS
European Union Thresholds applied in European Union Intrastat
system
Box XIX.1
Germany Estimation of trade below the threshold:
experience of the European Union (Germany)
Box XIX.2
XX. Goods for processing
European Union Definition and identification of goods for
processing in the European Union
Box XX.1
China Goods for processing: example from China Paragraph 20.18
China, Hong Kong
SAR
Goods for processing: example from China, Hong
Kong SAR
Paragraph 20.19
Iceland Goods for processing: example from Iceland Paragraph 20.20
Philippines Goods for processing: example from the
Philippines
Paragraph 20.21
Morocco Example from Morocco: compilation of
transactions accomplished as part of the
temporary importation for active refinement with
and without payments
Paragraph 20.22-20.23
XXI. Goods which cross borders as a result of transactions between related parties
United States of
America
Experience of the United States of America:
definition of “related parties”
Paragraph 21.13
United States of
America
Compilation and publication of data by the
United States Census Bureau
Paragraph 21.14
xxiv
XXII. Pipeline trade and trade through fixed power lines
China Trade in goods delivered continuously through
pipelines: example from China
Paragraph 22.14
United States of
America
Trade in gas and electricity: experience of the
United States of America
Paragraph 22.15
Germany Scope and compilation: experience of Germany Paragraph 22.16
Italy Production of external trade statistics on natural
gas and electricity: experience of Italy
Paragraph 22.17
and Annex XXII.A
XXIII. Ships and aircraft
Canada Recording of trade in an aircraft: example of
Canada
Box XXIII.2
Morocco Compilation of trade in aircraft: example of
Morocco
Paragraph 23.17
Italy Experience of Italy in the compilation of external
trade in ships and aircraft
Annex XXIII.A
Norway Experience of Norway in the compilation of
external trade in ships and aircraft
Annex XXIII.B
XXIV. Other special categories of goods and compilation for national accounts and balance
of payment purposes
Norway Example: compilation of data on fish caught by
Norwegian vessels outside the Norwegian custom
territory and landed in national ports of other
countries
Box XXIV.2
European Union Development of a reconciliation table:
cooperation towards adjusting balance-of-
payments statistics and foreign trade statistics in
the European Union
Paragraph 24.20
and Box XIV.3
PART FIVE: METADATA AND DISSEMINATION
XXV. Metadata
United States of
America
Example from the United States of America Paragraph 25.15
Italy Example from Italy Paragraph 25.16
Brazil Example from Brazil Paragraph 25.17
Mexico Towards the implementation of SDMX and DDI
for IMTS: experience of Mexico
Box XXV.1
xxv
XVI. Dissemination
Germany Treatment of confidentiality in Germany Box XXVI.1
Canada Disclosure control in Canada Box XXVI.2
Philippines Revision policy of the Philippines Box XXVI.3
Canada Revision policy of Canada Box XXVI.4
Brazil The central role of electronic databases for data
dissemination: the case of Brazil
Box XXVI.5
XXVII. Other international classifications relevant to trade statistics
UNCTAD UNCTAD product groups based on SITC, Rev.3 Box XXVII.1
PART SIX: EXTERNAL TRADE INDICES AND SEASONALLY ADJUSTED DATA
XXVIII. External trade indices
Norway Practices of Norway Paragraphs 28.29-28.31
and Annex XXVIII.A
Canada Practices of Canada Paragraph 28.32 and
Annex XXVIII.B
Czech Republic Practices of the Czech Republic Paragraph 28.33
Germany Practices of Germany Paragraph 34-28-35
Italy Practices of Italy Paragraph 28.36
XXIX. Seasonal adjustment
Germany Example of Germany Paragraph 29.25
Italy Example of Italy Paragraph 29.26
United States of
America
Example of the United States of America Paragraph 29.27
Norway Example of Norway Paragraph 29.28
xxvi
Abbreviations and acronyms
2008 SNA System of National Accounts 2008
ASEAN Association of South East Asian Nations
ASYCUDA Automated System for Customs Data
BEC Classification by Broad Economic Categories
BMP5 Balance of Payments Manual, 5th edition
BMP6 Balance of Payments and International Investment Position
Manual, 6th edition
CATI computer-assisted telephone interviewing
CIF cost, insurance and freight
COMESA Common Market for Eastern and Southern Africa
CPA Classification of Products by Activity
DQAF Data Quality Assessment Framework
ECE Economic Commission for Europe
EG-IMTS Expert Group on International Merchandise Trade Statistics
ESMS Euro SDMX Metadata Structure
ESS European Statistical System
EUROSTAT Statistical Office of the European Communities
FAO Food and Agriculture Organization of the United Nations
FOB free on board
GATT General Agreement on Tariffs and Trade
HS07 Harmonized Commodity Description and Coding System,
2007 edition
ICC International Chamber of Commerce
IMF International Monetary Fund
IMTS International merchandise trade statistics
IMTS 2010 International Merchandise Trade Statistics: Concepts and
Definitions, 2010
IMTS 2010-CM International Merchandise Trade Statistics: Compilers
Manual, Revision 1
IMTS, Rev.1 International Merchandise Trade Statistics: Concepts and
Definitions, Revision 1
IMTS, Rev.2 International Merchandise Trade Statistics: Concepts and
Definitions, Revision 2
INCOTERMS terms of delivery standardized by ICC
ISIC International Standard Industrial Classification of All
Economic Activities
MSITS 2010 Manual on Statistics of International Trade in Services 2010
NACE Statistical Classification of Economic Activities in the
European Community
OECD Organization for Economic Cooperation and Development
xxvii
QMF quality management framework
RKC revised Kyoto Convention
SAD single administrative document
SDMX Statistical Data and Metadata Exchange
SITC Standard International Trade Classification
SQL Structured Query Language
TF-IMTS inter-agency Task Force on International Merchandise Trade
Statistics
UN/CEFACT United Nations Centre for Trade Facilitation and Electronic
Business
UN/EDIFACT United Nations rules for Electronic Data Interchange for
Administration, Commerce and Transport
UPU Universal Postal Union
VAT value added tax
WCO World Customs Organization
WTO World Trade Organization
Part one. Legal framework and data sources
3
Chapter I
The legal framework for IMTS
1.1. Introduction. The present chapter stresses the importance of the legal framework for the
compilation and dissemination of international merchandise trade statistics (IMTS), including for
ensuring the availability of, and access to, the necessary data sources such as customs records
(see chap. II) and non-customs sources (see chaps. III and IV), for establishing effective
institutional arrangements (see chap. V) and for ensuring the protection of confidentiality (see
also chap. XXVI). Country practices are described in several case studies.
A. Importance of the legal framework for trade statistics
1.2. Importance of the legal framework. Because of its relevance for economic policy and
market analysis, international merchandise trade statistics generally enjoy the broad support of
Governments and the business community. However, owing to a number of factors, such as
reporting burden on companies and traders, confidentiality concerns, and the lack of proper
cooperation among various agencies, basic data may not be provided or accessible in a timely
and comprehensive way, thus making it difficult for the compilers to produce complete and high-
quality international merchandise trade statistics. Basic trade data include data provided by
traders through customs declarations, data provided by the customs administration, the central
bank, ministries and other national agencies (in the case where they are not the agency
responsible for compiling official trade statistics in the country), and data provided directly by
importing and exporting companies through surveys. The legal agreements, relevant laws and
regulations that govern such data-provision relations, as well as all other aspects of data
compilation and dissemination in a country, constitute the legal framework for IMTS. It is
important that the legal acts and appropriate administrative regulations be in place to mandate
and enable trade statisticians to collect, compile and disseminate high-quality trade statistics and
to safeguard the confidentiality of the individual data (see International Merchandise Trade
Statistics: Concepts and Definitions 2010,1 para. 8.17).
1.3. Types of legal acts. Legal acts relevant for international merchandise trade statistics,
which exist at three different levels are of three types, namely: (a) legal acts governing the
completion of the customs documentation; (b) legal acts regulating the collection, processing and
dissemination of international merchandise trade statistics and the working relations of the
concerned agencies; and (c) legal acts protecting the confidentiality of information. The last-
mentioned kinds of acts are usually incorporated in the acts covered under (a) and (b). Whereas
legal acts are enacted by the national (or regional) legislative bodies, international organizations
set out international guidelines and recommendations. If a country becomes a member of an
international organization, or a party to an international convention, or adopts international
recommendations, it then needs to incorporate those recommendations in its national laws and
regulations. Especially in the field of international trade, many international agreements exist to
properly govern the cross-border transactions in goods and services. In a similar sense,
international recommendations for trade statistics should be properly reflected in national laws or
1 Statistical Papers, Series M, No. 52 (UN publication, Sales No. E.10 XVII.13).
4
regulations of the country. The compilation and dissemination of international merchandise trade
statistics should also follow the Fundamental Principles of Official Statistics, such as
independence, impartiality, etc. (see IMTS 2010, para. 0.12). Furthermore, trade statisticians will
be able to do their job more efficiently if these national laws and regulations also cover the
establishment of appropriate institutional arrangements.
B. Legal acts governing customs records
1.4. International conventions and agreements relevant to customs records. The World
Customs Organization (WCO) is the international platform at which countries reach agreements
on customs regulations, while the World Trade Organization (WTO) is the body concerned with
international trade agreements. From an IMTS perspective, the two most relevant conventions
adopted by WCO are the revised International Convention on the Simplification and
Harmonization of Customs Procedures (known as the revised Kyoto Convention, or RKC),
which provides standards for various customs procedures and describes corresponding good
practices, and the International Convention on the Harmonized Commodity Description and
Coding System (known as Harmonized System Convention, or HS Convention)2, which sets out
the commodity classification. For trade statistics, the most important international agreement
adopted by WTO is the WTO Agreement on Customs Valuation.3 All of these and some other
relevant international conventions will be discussed in more detail in the subsequent chapters.
1.5. National laws and regulations. When a country becomes a signatory to a WCO
convention (or parts of it), the content of that convention needs to be properly reflected in its
national law. Generally, the national law adds further details applicable to the national needs and
circumstances. Based on and authorized by the respective national law, various government
regulations, administrative acts and service level agreements can be put in place to further
elaborate the rights and the responsibilities of the various agencies with respect to the statistical
process (see chap. V for details).
1.6. National laws and regulations: experience of the United States of America. The United
States Code contains the general and permanent laws of the United States by subject matter. It is
divided, by broad subjects, into 51 titles and published by the Office of the Law Revision
Counsel of the United States House of Representatives. More than half of these titles make
reference to laws and regulations enforced by the Administration for Customs and Border
Protection. For instance, Title 13, entitled ―Census‖, contains a chapter on ―Collection and
Publication of Foreign Commerce and Trade Statistics‖. Box I.1 below contains an excerpt
from section 301 of that chapter. Another example is Title 19, entitled ―Customs duties‖, which
contains most references to customs procedures.
2 United Nations, Treaty Series, vol. 1503, No. 25910.
3 See Legal Instruments Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at
Marrakash on 15 April 1994 (GATT secretarial publication, Sales No. GATT/1994-7).
5
Box I.1
United States Code: excerpt from Title 13 entitled “Census”
Chapter 9 entitled “Collection and Publication of Foreign Commerce and Trade
Statistics”: section 301, entitled “Collection and publication”, parts (a) and (b).
(a) The [United States Secretary of Commerce] is authorized to collect information from all
persons exporting from, or importing into, the United States and the noncontiguous areas over
which the United States exercises sovereignty, jurisdiction, or control, and from all persons
engaged in trade between the United States and such noncontiguous areas and between those
areas, or from the owners, or operators of carriers engaged in such foreign commerce or trade,
and shall compile and publish such information pertaining to exports, imports, trade, and
transportation relating thereto, as he deems necessary or appropriate to enable him to foster,
promote, develop, and further the commerce, domestic and foreign, of the United States and for
other lawful purposes.
(b) The Secretary shall submit to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate, on quarterly and cumulative bases,
statistics on United States imports for consumption and United States exports by country and by
product. Statistics on United States imports shall be submitted in accordance with the
Harmonized Tariff Schedule of the United States Annotated for Statistical Reporting Purposes
and general statistical note 1 thereof, in detail as follows:
(1) net quantity;
(2) United States customs value;
(3) purchase price or its equivalent;
(4) equivalent of arm‘s length value;
(5) aggregate cost from port of exportation to United States port of entry;
(6) a United States port of entry value comprised of (5) plus (4), if applicable, or, if not
applicable, (5) plus (3); and
(7) for transactions where (3) and (4) are equal, the total value of such transactions.
The data for paragraphs (1), (2), (3), (5), and (6) shall be reported separately for nonrelated and
related party transactions, and shall also be reported as a total of all transactions.
1.7. Access to information: experience of Canada. Ideally, the national law or regulations on
statistics require that statistically relevant information on foreign trade in possession of any
institution be made available to the authorized compiling agency. Box I.2 below gives an
example of such a legal arrangement, which requires the customs administration of Canada to
provide Statistics Canada, the country‘s compiling agency of international trade statistics, with
the relevant data.
6
Box I.2
Excerpt from the Statistics Act of Canada
Return of exports and imports from Customs
25. For the purposes of this Act and subject to section 17, the Solicitor General of Canada shall
cause to be sent to the Chief Statistician returns of imports and exports into and from Canada and
details of the means of transportation used therefor, in such manner and at such times as the
Governor in Council may prescribe on the recommendation of the Minister and the Solicitor
General of Canada. 1970-71-72, c. 15, s. 23; 1976-77, c. 28, s. 41; 2005, c. 38.
1.8. Contents of national regulations and advantages of custom records. National customs
law usually requires that importers and exporters of goods report particulars of their transactions
to customs for the purpose of collection of duties and taxes, for health, environmental and/or
other control purposes, and for statistical purposes. In many countries, a person who fails to
lodge the required declaration, or knowingly or recklessly lodges an inaccurate declaration, is
liable for an offence. Such regulations make customs records a readily available and generally
reliable source of data. Further details on customs records as the main data source for trade
statistics are provided in chapter II. Their advantages and limitations are discussed in chapter VII
and a number of related quality assurance issues are elaborated in chapter IX.
1.9. International recommendations for trade statistics. The United Nations Statistical
Commission is the international forum at which countries adopt the international
recommendations for trade statistics. At its forty-first session in 2010, the Commission adopted
the revised recommendations for international merchandise trade statistics (IMTS 2010).4 The
reflection of these recommendations in national laws or regulations, especially where the
recommendations require additional information, allows the responsible agency to more
effectively collect, process and disseminate the information necessary for the compilation and
dissemination of high-quality international merchandise trade statistics.
C. Legal acts regulating non-customs data sources
1.10. Legal acts regulating non-customs data sources. As will be discussed in more detail in
chapter II and further on in the present Manual, international merchandise trade statistics are
based largely on information from customs documents, but, compilers are not limited to using
only those documents. Certain kinds of transactions do not pass through customs and therefore
information on those transactions needs to be obtained from other data sources. The results of a
survey on country practices in the compilation of international merchandise trade statistics,
conducted in 2006 by the United Nations Statistics Division (UNSD), showed that, besides
customs declarations, countries also use postal records, tax records, currency exchange records,
enterprise surveys, aircraft and ship registers, foreign shipping manifests, and reports of
commodity boards (see chap. III) for more details on the 2006 survey results). All of those
additional data sources may be necessary or useful in completing or verifying a country‘s
international merchandise trade statistics.
4 See Official Records of the ECOSOC, 2010, Supplement No. 4 (E/2010/24), chap. I, Sect. B, decision 41/103, para.
(b).
7
1.11. The legal acts regulating the content of such data sources, the means by which they are
maintained and the access to them are of great importance for the compilers of international
merchandise trade statistics. The main national organizations involved in the compilation of
international trade statistics are national statistical offices, customs offices and central banks and,
in some countries, the ministry of trade or other specialized governmental or private bodies.
Other entities such as commodity boards, trade development boards, specialized ministries or the
ministry of commerce/economy, etc., may also play an important role, for example, by providing
information on particular categories of goods.
D. Legal acts regulating institutional arrangements
1.12. Effective institutional arrangements. The establishment and maintenance of effective
institutional arrangements among governmental agencies relevant to international merchandise
trade statistics can be greatly facilitated if the national law contains clear provisions with respect
to the roles, rights and responsibilities of those agencies as well as the mechanisms of their
cooperation (see IMTS 2010, para. 8.16). If such provisions and mechanism of cooperation are
lacking or are not sufficiently detailed, then it might be more difficult, and time consuming, to
establish effective institutional arrangements.
1.13. In this context, it is good practice for compilers to actively participate, whenever
appropriate, in the necessary modifications to national legislation or relevant administrative
regulations in order to establish a solid foundation for enhancing the quality and timeliness of
trade statistics (see IMTS, para. 8.14). It is good practice for the national laws and regulations to
designate only one governmental agency as responsible for the dissemination of official trade
statistics and to define the rights and responsibilities of all agencies involved in the collection,
processing and dissemination of trade statistics, so that those agencies will be in a better position
to establish the necessary institutional arrangements detailing their involvement in the statistical
process. For instance, if adequate legal provisions are in place, the responsible agency can
establish, faster and more efficiently, a working arrangement with the organizations keeping
records relevant to international merchandise trade statistics (e.g., records of imports and exports
of electrical energy and of pipeline shipments of natural gas and crude oil, maintained by
specialized governmental agencies, etc.). See chapter V for further discussion of institutional
arrangements.
E. Legal acts protecting confidentiality of traders and trade information
1.14. Confidentiality of customs declarations. In general, customs declarations are not subject
to the same level of confidentiality measures as other statistical sources. By design, customs
declarations are used to assess tariffs, fees and taxes, and to enforce multiple agencies‘
requirements for admissibility of goods into the country or to enforce the country‘s exports laws
and regulations. However, once the information is transmitted to the agency responsible for the
compilation of international merchandise trade statistics, in many cases, that agency treats it as
confidential. Nevertheless, in most cases, the compiling agency does not subject all data to
rigorous disclosure reviews, and applies instead ―passive disclosure‖ methods, where importers
and exporters inform the agency of possible disclosure situations for investigation and for some
form of statistical suppression.
8
1.15. Confidentiality of trade information. Confidentiality of information in the case of
international merchandise trade statistics encompasses confidentiality of personal information
(for instance, on individual records, the trader could be identified by name and address, or by a
publicly accessible identification number) and confidentiality of commercial information. In
general, the confidentiality of personal information should be protected by law in every country.
The compiling agency may also establish appropriate regulation to safeguard confidentiality in
the exchange of basic information among agencies. However, regardless of the legal status of
confidential information, whether personal or commercial, this information should still be
included in the trade statistics but reported in aggregate form, so that the confidential aspects of
these operations are not identified (see chap. XXVI for details). It is also desirable for national
legislation to define rights and responsibilities regarding access to the micro data, highlighting
the appropriate principles and procedures. The responsible agency should cooperate with the
national legislature in establishing such laws.
F. Country experiences
1.16. The legal framework for trade statistics in Morocco. In Morocco, the Office of Exchange
is responsible for the compilation and dissemination of external trade statistics. The Office of
Exchange is a public institution charged with two missions: to enact measures relating to
exchange control regulations and to establish the foreign trade statistics, balance of payments and
international investment position. The compilation and dissemination of foreign trade statistics
have been entrusted to the Office of Exchange since 1967 under a decision of the Minister of
Finance. The legal acts concerning trade statistics were consolidated in 2007 with the
promulgation of Law 19-06, on statistical reporting for the compilation of statistics of foreign
trade. This law contains provisions that permit:
(a) Establishment of the requirement for residents with respect to reporting transactions with
non-residents to the Office of Exchange;
(b) Specification of the reportable transactions: commercial and financial transactions with
non-residents;
(c) Definition of violations of the law on statistical reporting: non-declaration,
misrepresentation and non-compliance with statistical declaration requirements;
(d) Empowerment of the Office of Exchange to initiate investigations directly with traders.
1.17. The Confidentiality Act of the Philippines. Confidentiality of trade data in the Philippines
is based on provisions of Commonwealth Act 591, section 4. The Act states, inter alia, that data
furnished to the National Statistics Office by an individual, corporation, partnership, institution
or business enterprise shall not be used in any court or in any public office as evidence either for
or against the individual, corporation, association, partnership, institution or business enterprise
from whom such data emanate; nor shall such data or information be divulged to any person
except authorized employees of the National Statistics Office, acting in the performance of their
duties; nor shall such data be published except in the form of summaries or statistical tables in
which no reference to an individual, corporation, association, partnership, institution or business
enterprise shall appear. Any person violating the provisions of this section shall, upon
conviction, be punished by a fine or by imprisonment, or by both. Strict compliance with
Commonwealth Act 591, section 4, is being implemented in the Philippines in the compilation
9
and dissemination of international merchandise trade statsitics. Data being released are all in
summary form, and tables are in aggregate value, with no reference to individual importer or
exporter data. Value and volume of import and export data are released only by commodity and
by country. No information on the identity of the exporter or the importer is indicated in the
statistical tables.
11
Chapter II
Customs declarations and related customs records
2.1. Introduction. The present chapter elaborates the recommendations on the use of
customs declarations and related customs records contained in IMTS 2010, chapter VIII, on data
compilation strategies. The present chapter provides details on the revised Kyoto Convention
(RKC) and identifies customs procedures indicating inclusion or exclusion of movements of
goods from international merchandise trade statistics. The verification of the information
contained in customs declarations and other issues related to data collection and data quality are
also covered. As customs declarations are the main source of trade data in most countries,
compilers of trade statistics should be fully aware of the relevant laws and administrative
regulations that define customs procedures and the scope and level of detail of the declarations,
which are in effect in their countries. This chapter builds on chapter I, which discusses the
overall legal framework for the compilation and dissemination of international merchandise trade
statistics. The use of non-customs sources is covered in chapter III. This chapter is closely
related to and provides the background for chapters XII to XVIII, which elaborate on the
compilation of particular data items from the point of view of customs declarations as the main
data source for international merchandise trade statistics.
A. Customs declarations as the most prevalent source of trade data
2.2. Customs declarations as a source of information. At most points of entry, goods are
brought into (or withdrawn from) the customs territory of a country under various customs
procedures with associated declarations which contain many statistically important particulars of
such movements. So far, only within a few customs unions (for instance, the European Union or
the Customs Union of Belarus, Kazakhstan and the Russian Federation), have customs
procedures been lifted in favour of free market circulation. Transactions among all other
countries and between union and non-union countries are regulated through customs procedures.
Therefore, IMTS 2010 treats those customs records as the most prevalent source of data and
recommends that statisticians take advantage of them (IMTS 2010, para. 8.2). Recognizing the
need to ensure international comparability and to increase the relevance of trade data for national
policy purposes, compilers should cooperate with the national customs authorities in promoting
the application of international guidelines on customs procedures as laid out by the World
Customs Organization (WCO).5 A summary of terminology and customs procedures is provided
below.
5 Most of those procedures are formulated in the International Convention on the Simplification and Harmonization
of Customs Procedures, which was signed at Kyoto, Japan, on 18 May 1973 and revised in June 1999; WCO has
issued the ―Glossary of international customs terms‖ (Brussels; October 2011) to facilitate uniformity in use of
customs terminology. The Revised Kyoto Convention is available from: http://www.wcoomd.org/en/topics/
facilitation/instrument-and-tools/conventions/pf_revised_kyoto_conv/kyoto_new.aspx (interactive web version); and
http://www.wcoomd.org/en/topics/facilitation/instrument-and-tools/conventions/pf_revised_kyoto_conv/~/media/
A7D0E487847940AD94DD10E3FDD39D60.ashx (pdf). The Glossary of International Customs Terms is available
from http://wcoomdpublications.org/downloadable-publications/glossary-of-international-customs-
terms.html?___store=english&___from_store=french; http://wcoomdpublications.org/downloadable/download/
sample/sample_id/123/ (pdf); and http://www.wcoomd.org/~/media/WCO/Public/Global/PDF/Topics/Facilitation/
Ressources/Publications/Updated%20Glossary%20E%20v2%202011.ashx?db=web (pdf).
12
2.3. The customs (goods) declaration and the declarant. A customs declaration is ―any
statement or action, in any form prescribed or accepted by the Customs, giving information or
particulars required by the Customs‖.6 A declarant is ―any natural or legal person who makes a
customs declaration or in whose name such a declaration is made‖.7 The RKC notes that a
declarant need not be the owner of the goods but may be any person having the right to dispose
of the goods (e.g., the carrier, the forwarding agent, the consignee or an agent approved by the
customs agency).8 The term ―customs declaration‖ includes not only traditional declarations in
the form of paper documents but also declarations made through electronic and oral means and
actions required on the part of passengers under the dual-channel (red/green) system. The ―data
content‖ of those declarations may vary significantly; normally, the most comprehensive data
records are provided when goods are cleared for home use or declared for outright exportation.
2.4. Related customs records and accompanying documents. The tern ―related customs
records‖ is understood to refer to customs documents to be filled out in addition to the goods
declaration, such as, for example, a declaration of customs value or special forms in cases where
goods enter or leave customs free zones or industrial free zones. The requirements of countries
might be very different. Related customs records differ from documents accompanying customs
declarations, such as an invoice, a shipping manifest, a bill of lading or a certificate of origin,
which are not completed or issued at customs.9 For the purpose of this Manual, the documents
accompanying customs declarations are considered non-customs data sources, while related
customs records are considered customs records. However, countries might not adhere to such a
distinction and might consider all or some of the supporting documentation provided at customs
as part of the customs records.
2.5. Changing requirements at customs. It should be noted that the role of customs is
changing owing to an increased emphasis on security and a global proliferation of trade
agreements. The lowering of tariffs and the simplification of customs formalities change the
commercial practices as well. Therefore, some assumptions about customs records are no longer
as accurate as they used to be. Also, as a result of these changes, some of the customs procedures
that statistical agencies might have relied upon to identify certain types of transborder
movements of goods are no longer widely used or are used differently. For instance, in certain
cases the goods that are being simply transported through a given country, which in the past
would have normally been declared as in-transit shipments and excluded from trade statistics, are
now often declared and recorded as normal imports (and subsequent re-exports) and therefore
inflate the country‘s trade statistics. In this connection, it is good practice for customs officers
and statisticians to cooperate closely so as to arrive at a common understanding of the
distinctions between certain customs and statistical definitions and of the fact that a transaction
6 See the definition of ―goods declaration‖ in the WCO Glossary; see also the RKC, General Annex, Chap. 2,
E19/F8, ―goods declaration.‖
7 See the definition of ―declarant‖ in the WCO Glossary; see also the RKC, General Annex, Chap 2, E14/F7,
―declarant‖.
8 See the RKC, General Annex, Chapter 3, standards 3.6 and 3.7.
9 For example, the bill of lading is a document issued by a carrier to a shipper, while the certificate of origin is
usually a document issued by the ministry of trade or industry or by another authorized governmental agency.
13
falling under the same customs procedure may later be classified differently for statistical
purposes.
B. Structure and content of the revised Kyoto Convention
2.6. The International Convention on the Simplification and Harmonization of Customs
Procedures entered into force in 1974. The revised Kyoto Convention (RKC) was adopted in
June 1999. The provisions contained in the RKC aim at the facilitation of trade but at the same
time make customs records a highly standardized and reliable data source for trade statistics
across countries. The RKC comprises a Body, a General Annex and Specific Annexes.
2.7. The Body of the revised Kyoto Convention. The main body of the RKC contains
information on the scope, structure and management of the Convention, and defines its
ratification process by the contracting parties. For instance, article 9 (1) of the RKC specifies that
―any Contracting Party which ratifies this Convention or accedes thereto shall be bound by any
amendments to this Convention, including the General Annex, which have entered into force at
the date of deposit of its instrument of ratification or accession‖. Further, article 9 (2) specifies
―any Contracting Party which accepts a Specific Annex or Chapter therein shall be bound by any
amendments to the Standards contained in that Specific Annex or Chapter which have entered
into force at the date on which it notifies its acceptance to the depositary‖.
2.8. Ratification by contracting parties. As indicated in its article 9, contracting parties can
ratify the RKC without signing off on the chapters of its Specific Annexes. For instance, while
Austria, Azerbaijan and Belgium are all contracting parties to the RKC, they did not sign off on
any of the chapters of its Specific Annexes. As at 1 December 2011, 78 countries had become
contracting parties to the RKC. Only 25 contracting parties have accepted chapters of the
Specific Annexes.
2.9. Structure and content of the Annexes. The annexes of the original Kyoto Convention
were replaced by a General Annex and Specific Annexes. The General Annex and each Specific
Annex to the RKC are subdivided into Chapters, which comprise (a) definitions and (b)
standards, some of which, in the General Annex, are transitional standards. Each Specific Annex
also contains recommended practices in addition to standards. Standards have to be followed
strictly and included in a country‘s customs law. The term ―transitional standard‖ in the General
Annex refers to a standard for which a longer period for implementation is permitted.
Recommended practices are mandatory unless countries enter reservations against them. Each
Annex is accompanied by guidelines, the texts of which are not binding upon contracting parties.
Box II.1 provides an example of standards in the General Annex: those for the goods declaration
formats and contents.
14
Box II.1
General Annex of the revised Kyoto Convention: example of standards
Goods declaration format and contents
Standard 3.11. The contents of the Goods declaration shall be prescribed by the Customs. The
paper format of the Goods declaration shall conform to the UN-layout key.
For automated Customs clearance processes, the format of the electronically lodged Goods
declaration shall be based on international standards for electronic information exchange as
prescribed in the Customs Co-operation Council Recommendations on information technology.
Standard 3.12. The Customs shall limit the data required in the Goods declaration to only such
particulars as are deemed necessary for the assessment and collection of duties and taxes, the
compilation of statistics and the application of Customs law.
Standard 3.13. Where, for reasons deemed valid by the Customs, the declarant does not have all
the information required to make the Goods declaration, a provisional or incomplete Goods
declaration shall be allowed to be lodged, provided that it contains the particulars deemed
necessary by the Customs and that the declarant undertakes to complete it within a specified
period.
Standard 3.14. If the Customs register a provisional or incomplete Goods declaration, the tariff
treatment to be accorded to the goods shall not be different from that which would have been
accorded had a complete and correct Goods declaration been lodged in the first instance.
The release of the goods shall not be delayed provided that any security required has been
furnished to ensure collection of any applicable duties and taxes.
2.10. Definitions contained in the General Annex of the revised Kyoto Convention. The
General Annex of the RKC defines and explains all customs terms and operations that are
applicable to a variety of specific customs procedures which are defined in the Specific Annexes.
Chapter 2 of the General Annex provides useful definitions of, for example, ―clearance‖,
―customs law‖ and ―customs territory‖. Chapter 3 provides a detailed definition of ―clearance
and other customs formalities‖ which includes descriptions of the goods declaration and of the
examination of the goods. The General Annex also contains chapters, among others, on duties
and taxes; security; customs control; application of information technology; the relationship
between the customs and third parties; and information, decisions and rulings supplied by the
customs.
2.11. Specific Annexes of the revised Kyoto Convention: customs procedures. The Specific
Annexes of the RKC provide all of the details associated with customs procedures. Such
information contained therein is highly relevant for the compilation of international merchandise
trade statistics. A list of the Specific Annexes and of the chapters is provided in Table II.1.
15
Table II.1
List of specific annexes of the revised Kyoto Convention and their chapters
Specific Annex Chapters therein
A
Arrival of goods in a Customs
territory
A1 Formalities prior to the lodgement of
the Goods declaration
A2 Temporary storage of goods
B
Importation
B1 Clearance for home use
B2 Re-importation in the same state
B3 Relief from import duties and taxes
C Exportation C1 Outright exportation
D
Customs warehouses and free
zones
D1 Customs warehouses
D2 Free zones
E
Transit
E1 Customs transit
E2 Transshipment
E3 Carriage of goods coastwise
F
Processing
F1 Inward processing
F2 Outward processing
F3 Drawback
F4 Processing of goods for home use
G Temporary admission G1 Temporary admission
H Offences H1 Customs offences
J
Special procedures
J1 Travellers
J2 Postal traffic
J3 Means of transport for commercial use
J4 Stores
J5 Relief consignments
K Origin K1 Rules of origin
K2 Documentary evidence of origin
K3 Control of documentary evidence of
origin
C. Customs procedures and IMTS
2.12. Customs procedures and trade statistics. Most of the international transactions of goods
pass through the customs administrations of the exporting and the importing countries, and are
subject to customs procedures. Customs records created as a result of the application of such
procedures are the most prevalent and most important source of data for trade statistics.10
Further, the customs procedures are used to determine what movements of goods are to be
included or excluded from international merchandise trade statistics. However, countries may not
always strictly follow the standards and recommended practices of the RKC or may have other
10
See chap. III for a description of trade flows that might not be covered by customs and for which the use of non-
customs sources of data might be needed.
16
procedures or procedures in addition to those identified within it. Therefore, compilers should
carefully review the details of the customs procedures and then decide on whether to include or
exclude any given procedures, following the IMTS 2010 recommendations on the scope of
recording (see IMTS 2010, para. 8.5).
2.13. Inclusion and exclusion of goods based on specific customs procedures. The most
common customs procedure for imports is the declaration of goods for Clearance for home use,
whereas for exports it is the procedure of outright exportation. Goods transactions under these
customs procedures are, as a general guideline, to be included in the international merchandise
trade statistics. Goods movements under the procedures transit, transshipments and temporary
admissions are, in general, to be excluded. Boxes II.2 and II.3 below provide the list of customs
procedures identified in the RKC under which, as a general guideline, goods are to be included in
or excluded from trade statistics, assuming that the country follows the RKC in the definition and
application of these customs procedures (see IMTS 2010, para. 8.5). Box II.4 provides examples
of cross-border movements of goods that might not be covered by separate customs procedures
but that should be included in international merchandise trade statistics.
2.14. List of customs procedures under which goods are to be included in IMTS. Box II.2
provides the list customs procedures identified in the RKC and whose application should result
in the inclusion of cross-border movements of goods in imports or exports following the relevant
recommendations of IMTS 2010.
Box II.2
Customs procedures covering goods to be included in IMTS
1. Imports
Clearance for home use (Specific Annex B, Chapter 1)
Specific Annex B of the RKC defines ―clearance for home use‖ as the Customs procedure which
provides that imported goods enter into free circulation in the Customs territory upon the
payment of any import duties and taxes chargeable and the accomplishment of all the necessary
Customs formalities. It further defines ―goods in free circulation to‖ mean goods which may be
disposed of without Customs restriction.
Customs warehouses (Specific Annex D, Chapter 1)
―Customs warehousing procedure‖ means the Customs procedure under which imported goods
are stored under Customs control in a designated place (a Customs warehouse) without payment
of import duties and taxes. Customs can establish public and private customs warehouses, for
which Customs shall lay down the requirements for the establishment, suitability and
management and the arrangements for Customs control. The arrangements for storage of goods
in Customs warehouses and for stock keeping and accounting shall be subject to the approval of
the Customs. As mentioned above, the authorized operations are strictly defined. Goods are
allowed to stay in the warehouse for at least one year, unless the goods are perishable.
Free zones (Specific Annex D, Chapter 2)
―Free zone‖ means a part of the territory of a Contracting Party where any goods introduced are
generally regarded, insofar as import duties and taxes are concerned, as being outside the
Customs territory. National legislation shall specify the requirements relating to the
17
establishment of free zones, the kinds of goods admissible to such zones and the nature of the
operations to which goods may be subjected in them. Customs shall lay down the arrangements
for Customs control, including appropriate requirements as regards the suitability, construction
and layout of free zones, and have the right to carry out checks at any time on the goods stored in
a free zone.
Inward processing (Specific Annex F, Chapter 1)
―Inward processing‖ is defined as the Customs procedure under which certain goods can be
brought into a Customs territory conditionally relieved from payment of import duties and taxes,
on the basis that such goods are intended for manufacturing, processing or repair and subsequent
exportation. Specific Annex F further defines that inward processing shall not be limited to
goods imported directly from abroad, but shall also be granted for goods already placed under
another Customs procedure and that it should not be refused solely on the grounds of the country
of origin of the goods, the country from which they arrived or the country of destination.
Processing of goods for home use (Specific Annex F, Chapter 4)
―Processing of goods for home use‖ means the Customs procedure under which imported goods
may be manufactured, processed or worked, before clearance for home use and under Customs
control, to such an extent that the amount of the import duties and taxes applicable to the
products thus obtained is lower than that which would be applicable to the imported goods. The
granting of the procedure of processing of goods for home use shall be subject to the conditions
that:
(a) the Customs are able to satisfy themselves that the products resulting from the processing of
goods for home use have been obtained from the imported goods;
(b) the original state of the goods cannot be economically recovered after the manufacturing,
processing or working.
2. Re-imports
Re-importation in the same state (Specific Annex B, Chapter 2)
―Goods exported with notification of intended return‖ means goods specified by the declarant as
intended for re-importation, in respect of which identification measures may be taken by the
Customs to facilitate re-importation in the same state.
―Re-importation in the same state‖ means the Customs procedure under which goods which were
exported may be taken into home use free of import duties and taxes, provided they have not
undergone any manufacturing, processing or repairs abroad and provided that any sums
chargeable as a result of repayment or remission of or conditional relief from duties and taxes or
of any subsidies or other amounts granted in connection with exportation must be paid. The
goods that are eligible for re-importation in the same state can be goods that were in free
circulation or were compensating products.
3. Exports
Outright exportation (Specific Annex C, Chapter 1)
Specific Annex C states that ―outright exportation‖ means the Customs procedure applicable to
goods which, being in free circulation, leave the Customs territory and are intended to remain
18
permanently outside it. The Customs shall not require evidence of the arrival of the goods abroad
as a matter of course.
Outward processing (Specific Annex F, Chapter 2)
―Outward processing‖ means the Customs procedure under which goods which are in free
circulation in a Customs territory may be temporarily exported for manufacturing, processing or
repair abroad and then re-imported with total or partial exemption from import duties and taxes.
Drawback (Specific Annex F, Chapter 3)
―Drawback‖ means the amount of import duties and taxes repaid under the drawback procedure.
―Drawback procedure‖ means the Customs procedure which, when goods are exported, provides
for a repayment (total or partial) to be made in respect of the import duties and taxes charged on
the goods, or on materials contained in them or consumed in their production.
Postal traffic (Specific Annex J, Chapter 2)
According to the RKC, clearance of goods in postal traffic ―shall be carried out as rapidly as
possible" and customs control shall be restricted to the minimum‖.a
Relief consignments (Specific Annex J, Chapter 5)
The RKC stipulates that clearance of relief consignments for export, transit, temporary admission
and import shall be carried out as a matter of priority. In the case of relief consignments the
Customs shall provide for: (a) lodging of a simplified Goods declaration or of a provisional or
incomplete Goods declaration subject to completion of the declaration within a specified period;
(b) lodging and registering or checking of the Goods declaration and supporting documents prior
to the arrival of the goods, and their release upon arrival; (c) clearance outside the designated
hours of business or away from Customs offices and the waiver of any charges in this respect;
and (d) examination and/or sampling of goods only in exceptional circumstances. b
a See the RKC, Specific Annex J, Chapter 2, Standard 3.
b See the RKC, Specific Annex J, Chapter 5, Standards 2 and 3.
2.15. List of customs procedures under which goods are to be excluded from IMTS. Box II.3
provides the list of customs procedures whose application should result in exclusion of the goods
from the international merchandise trade statistics, as goods entering or leaving a country under
any of those procedures do not add or subtract from the stock of goods of the country.
Box II.3
Customs procedures covering goods to be excluded from IMTS
Customs transit (Specific Annex E, Chapter 1)
―Customs transit‖ means the Customs procedure under which goods are transported under
Customs control from one Customs office to another. The Customs shall allow goods to be
transported under Customs transit in their territory:
(a) from an office of entry to an office of exit;
(b) from an office of entry to an inland Customs office;
(c) from an inland Customs office to an office of exit; and
(d) from one inland Customs office to another inland Customs office.
19
Goods being carried under Customs transit shall not be subject to the payment of duties and
taxes. The Customs at the office of departure shall take all necessary action to enable the
office of destination to identify the consignment and to detect any unauthorized interference.
Transshipment (Specific Annex E, Chapter 2)
―Transshipment‖ means the Customs procedure under which goods are transferred under
Customs control from the importing means of transport to the exporting means of transport
within the area of one Customs office which is the office of both importation and exportation.
The Customs should accept as the Goods declaration for transshipment any commercial or
transport document for the consignment concerned which meets all the Customs
requirements. This acceptance should be noted on the document.
Temporary Admission (Specific Annex G, Chapter 1)
―Temporary admission‖ means the Customs procedure under which certain goods can be
brought into a Customs territory conditionally relieved totally or partially from payment of
import duties and taxes; such goods must be imported for a specific purpose and must be
intended for re-exportation within a specified perioda and without having undergone any
change except normal depreciation due to the use made of them.
National legislation shall enumerate the cases in which temporary admission may be granted
and temporary admission shall be subject to the condition that the Customs are satisfied that
they will be able to identify the goods when the temporary admission is terminated. The
Customs shall fix the time limit for temporary admission in each case.
Temporary admission with total conditional relief from duties and taxes should be granted to
the goods referred to in the Annexes to the Convention on Temporary Admission (Istanbul
Convention) of 26 June 1990: b
(a) ―Goods for display or use at exhibitions, fairs, meetings or similar events‖.
(b) ―Professional equipment‖.
(c) ―Containers, pallets, packings, samples and other goods imported in connection with a
commercial operation‖.
(d) ―Goods imported for educational, scientific or cultural purposes‖.
(e) ―Travellers‘ personal effects and goods imported for sports purposes‖.
(f) ―Tourist publicity material‖.
(g) ―Goods imported as frontier traffic‖.
(h) ―Goods imported for humanitarian purposes‖.
(i) ―Means of transport‖.
(j) ―Animals‖. a See also IMTS 2010, para. 1.43
b Available from http://www.wcoomd.org/en/about-us/legal-instruments/~/media/
2D53E23AA1A64EF68B9AC708C6281DC8.ashx
2.16. Cross-border movements of goods that might not be covered by specific customs
procedures but that should be included in IMTS. There are a number of cross-border movements
of goods that might not be covered by specific customs procedures but that constitute significant
20
trade and should be included in the international merchandise trade statistics. Examples of such
movements of goods are provided in Box II.4.11
Box II.4
Examples of cross-border movements of goods that might not be covered by separate
customs procedures but that should be included in IMTS
Goods on consignment
Border trade (trade between residents of adjacent areas of bordering countries as stipulated
by national legislation)
Barter trade
International aid (aid or donations given gratis between Governments or by international
organizations)
Gifts and donations (to be included if to significant scale as defined by national law)
Contracting projects (exports of equipment or materials to be used for construction projects
carried out by country residents)
Goods on lease (imports or exports under a financial lease arrangement) (see IMTS 2010,
para.1.28)
Equipment or materials invested by foreign-invested enterprises (the import of equipment,
parts or other materials by a foreign-invested enterprise as part of its total initial investment)
Duty-free shop (the duty-free import of commodities for sale in specific shops to specific
individuals according to specific customs regulations)
Seizure and subsequent resale by the State.
2.17. National application of the drawback procedure. As indicated at the beginning of the
present section, there might be differences in the application of specific customs procedures
between countries, and trade statistician need to be aware of how certain procedures are defined
and applied in detail in their country. Box II.5 provides two country examples of the application
of the drawback procedure
Box II.5
Use of the drawback procedure: experiences of Brazil and Canada
Definition and application of the drawback procedure in Brazil
Drawback is a foreign trade policy in which manufacturers of Brazil are allowed to purchase,
abroad or in the domestic market, raw materials and parts, without customs charges, to be used to
manufacture goods that will be exported. The drawback enables companies of Brazil to be
competitive, since they do not need to add on taxes to their exporting prices.
Excerpt from the Canadian Border Services Agency (CBSA) memorandum regarding the
drawback programme
1. This programme will be of benefit to persons who presently, or will (a) import goods into
Canada, (b) receive goods imported into Canada, or (c) export the imported goods from Canada,
and wish to file a claim for a drawback (refund) of the duties paid.
11
The RKC lists, inter alia, the most widely used regimes, such as clearance for home use and outright exportation
(in some countries responsible for up to 90% of all declarations).
21
2. When imported goods which are subsequently exported from Canada were (a) further
processed, (b) displayed or demonstrated in Canada, (c) used for the development or production
in Canada of goods for subsequent export, and (d) exported without having been used in Canada
for any purpose other than for (a), (b), or (c), a drawback may be filed to claim the duties paid on
the imported goods. This means a refund of the customs duties, anti-dumping and countervailing
duties, or excise taxes, other than the Goods and Services Tax (GST)/Harmonized Sales Tax
(HST), that were paid at the time of importation, may be claimed.
D. Verification of the declared information
2.18. Role of customs in verification of the declared information. The RKC recognizes the
rights of the national customs administrations to ensure the accuracy of the information
contained in the declarations by various means, including examination of the goods and any
reference documents.
2.19. Examination of goods. The detailed examination of goods is considered a prerogative
of any country. The Convention recommends that ―(a)ll goods, including means of transport,
which enter or leave the Customs territory, regardless of whether they are liable to duties and
taxes, shall be subject to Customs control‖. 12
Further, ―in the application of Customs control,
the Customs shall use risk management‖13
and ―the Customs shall use risk analysis to determine
which persons and which goods, including means of transport, should be examined and the
extent of the examination‖.14,15
Risk assessment allows physical inspections to be significantly
limited; in some countries, information about inspections is flagged in the data, while in other
countries, no such information is available. It is a good practice for compilers of international
merchandise trade statistics to cooperate with customs in reviewing the scope and organization
of physical inspection procedures so as to ensure that statistical concerns relating to data quality,
verification and validation are fully taken into account. For further information on quality
assurance, see chapter IX.
2.20. Reference documents accompanying customs declarations. The RKC acknowledges
the need for the customs to use reference documents to support or verify statements made in the
declarations in order ―to permit control of the operation and to ensure that all requirements
relating to the application of Customs law have been complied with‖. 16
The most typical
examples of such documents are import licences, documentary evidence of origin, health or
12
See the RKC, General Annex, Chapter 6, Standard 6.1.
13 Ibid., Standard 6.3
14 Ibid., Standard 6.4
15 See also General Annex, Chapter 3, Standard 3.33. Further, the compiler should be aware of special procedures
for authorized persons: ―For authorized persons who meet criteria specified by the Customs, including having an
appropriate record of compliance with Customs requirements and a satisfactory system for managing their
commercial records, the Customs shall provide for allowing a single Goods declaration for all imports or exports in
a given period where goods are imported or exported frequently by the same person‖ and ―use of the authorized
persons‘ commercial records to self-assess their duty and tax liability and, where appropriate, to ensure compliance
with other Customs requirements‖ (see RKC, General Annex, Chapter 3, Transitional Standard 3.32.
16 See RKC, General Annex, Chapter 3, Standard 3.16.
22
phytopathological certificates, commercial invoices, and transport documents. It is advised that
compilers make standing arrangements with the customs authorities to secure access, as
permitted by law, to whichever of those documents are collected, and to use them as additional
sources of information. It is recognized, however, that the use of such documents might be
limited only to special cases justified by their economic or other significance.
E. Lodgement of the customs declarations and related data-collection issues
2.21. Electronic declaration. A declaration can exist not only as a printed document but also
in electronic form. For example, many countries use electronic declarations for a significant
proportion of imports. Many developing countries use the Automated System for Customs Data
(ASYCUDA), a computerized system developed by The United Nations Conference on Trade
and Development (UNCTAD).17
The electronic declarations significantly facilitate the
processing of data.
2.22. Statistical requirements. The data requirements of customs may not always fulfill all
statistical needs. In particular, for most customs procedures, the RKC leaves it to national
legislation to decide what customs records are to be kept, whether or not a goods declaration
should be lodged and what information it should contain. Compilers of trade statistics are
advised to cooperate with customs to design such forms of customs records which, while not
adding administrative or financial burden to customs and traders, contain all statistically
significant data fields (see chap. VIII for details) and allow the collection of the data required for
trade statistics. The statistical requirements should be addressed systematically with customs and
included in a memorandum of understanding and should also be addressed in the joint work
programme of customs and the agency responsible for compiling international trade statistics
(see chap.V). In this connection, the statistical agencies could seek also greater access to such
information as shipping manifests.
2.23. Time of lodgement and time of data recording. The RKC does not provide strict
standards regarding the timing of lodgement. It states only that national legislation should lay
down a time limit for lodgement that will enable the declarant to assemble the particulars needed
for making the declaration and to obtain the required supporting documents.18
Governments are
free to select the beginning of the time limit, for examples, the time when goods are unloaded,
presented at the customs office or released. It follows that the time of lodgement of the
declaration and the actual time when goods cross the border of the economic territory of a
country may, in some cases, vary significantly. However, since the time of lodgement generally
approximates that of the crossing of the border of the economic territory of a country, it is
recommended by IMTS 2010 to use the time of lodgement as the time of trade data recording in
the case of customs-based systems of data collection (for further details regarding the time of
recording, see chap.XII)
17
ASYCUDA can be configured to suit the national characteristics of individual customs regimes. For further
details, see chapter VIII of this Manual or visit the ASYCUDA website (http://www.asycuda.org).
18 See RKC, General Annex, Chapter 3, Standard 3.23.
23
2.24. Lodgement of provisional or incomplete declarations. If the declarant, at the time of
lodgement of the declaration, is unable to provide all the required information, the customs
authorities may accept a provisional or incomplete declaration and release the goods under
condition that the declarant will provide the missing information afterwards within the specified
period in an additional declaration.19
The time of lodgement of the additional declaration and the
time when goods cross the border of the customs territory may be far apart. However, both
declarations refer to the same transaction and must be linked during the data processing.
Compilers are advised to use (a) the provisional or incomplete declaration to identify the time of
lodgement and collect provisional data and (b) the additional declaration to revise or complete
trade data without the time of recording changing.
2.25. Release of the declaration after release of goods. Compilers should take into account
the use of a standing authority for release of goods before presentation of the declaration. Such
authority is given to a growing number of traders in order to enable speedy release of the
imported or exported goods without waiting for collection of the documents needed for
completion of the declaration.20
Compilers should include the data from such declarations in the
monthly statistical reports corresponding to the months when the goods actually enter or leave
the economic territory of a country.
2.26. Periodic lodgement of declaration. When goods are imported or exported frequently
by the same company or person, the RKC recommends that customs allow a single goods
declaration to cover all importations or exportations by that person for a particular reference
period.21
That facilitation may be granted if the company or person keeps proper commercial
records and if necessary control measures can be taken. The RKC recognizes the right of
customs to require that the declarant produce, at the time the goods actually cross the border, a
commercial or official document such as an invoice, waybill or dispatch note, etc., giving the
main particulars of the concerned consignment. Compilers should periodically review such
documents, if permitted by law, in order to be able to assign the trade to the appropriate month
(based on time of crossing the border), especially in cases when trade is significant in value
(quantity) and/or the reference period of the reporting by the trader does not coincide with a
period used for statistical reporting (normally the calendar month).
2.27. Absence of declarations. In some cases, mostly when duties and taxes are not collected,
national law may not require that declarations be lodged. Compilers are encouraged to collect
from the customs any information that may help to identify shipments of undeclared goods, and
to use non-customs data sources, including estimation, to ensure proper coverage of the
international merchandise trade statistics.
2.28. Simplified declarations, customs and statistical thresholds and estimation. Certain
goods that are not strictly controlled can be declared in less detail or made exempt from reporting
requirements; this can also apply when the value or quantity is below a certain customs-defined
19
Ibid., General Annex, Chapter 3, Standard 3.13 and the guidelines provided therin.
20 Ibid., Standard 3.25 and the guidelines provided therein.
21 Ibid., Transitional Standard 3.32, and the guidelines provided therein.
24
or statistical threshold.22
Compilers should be aware of those transactions and decide whether
and how to include them in the trade statistics so as to prevent unwarranted loss of coverage. If
the value of the trade is considered significant it should be included in the statistics (see
IMTS 2010, para. 1.3). Compilers should develop, in cooperation with the customs
administration, adequate data-collection or estimation procedures for these transactions. Those
procedures may rely on the use of commercial documents available to the customs or may be
based on appropriate non-customs sources of data. Compilers may also establish a threshold for
statistical purposes, i.e., set a value below which transactions might not be processed and
included in the detailed international merchandise trade statistics, or included as an estimate
based on a sampling approach or as an aggregate. Such an approach is useful where resources
may not be sufficient to ensure processing of all the transactions on a timely basis. However, in
those cases, clear explanatory notes should be included in the metadata. For further information,
see section E of chapter XIX, which discusses simplified declarations and reporting thresholds.
2.29. Retention of customs records. National law usually requires that, for control purposes,
copies of goods declarations, along with any supporting documentation, be kept for several
years.23
It is good practice for compilers to work together with customs in developing a retention
policy for the documents that support statistical needs, including establishing an electronic
database to facilitate storage, retrieval and processing of electronic copies of such documents.
F. Information required to complete a goods declaration
2.30. Variety of declaration forms and names of goods declarations. Customs around the
world use a variety of declaration forms, whose designations may vary from one country or
customs union to another even if they are applied for similar customs procedures. Such
designations include ―import/export declaration form‖, ―cargo customs declaration‖, ―electronic
export information‖, ―single administrative document‖, ―entry/exit summary form‖, ―warehouse
entry/dispatch form‖ and ―free zone entry/dispatch form. Annex II.A provides an example of a
goods declaration form.
2.31. Information required to complete a goods declaration. The information items normally
required in the custom declaration form and relevant for compilation of trade statistics (either for
inclusion in the statistics or for verification purposes) are listed in table VIII.2.24
The data items
required for statistical purposes can be viewed as a subset of the information items required on
the customs declaration. However, some items required for statistics might be missing or might
not be mandatory.
2.32. Additional information available on the declaration. Customs declarations may also
contain information that can be used to analyse the structure of trade, not only by parameters
22
For example, in the United States, most import transactions valued at less than $1,500 may be reported
―informally‖, with only minimal information reported. See para. 19.17 for the explanation of customs and statistical
threshold.
23 For example, in the United States, exporters or their agents must maintain copies of shipping documents for three
years after exportation.
24 Not all types of information are mandatory for many customs procedures.
25
recommended by IMTS 2010 but also by other parameters important for a given country or
customs union (e.g., goods identified as being under export or import controls, province/State
within the country from which the goods originate, etc.). Such practice is not in conflict with
international recommendations: to the contrary, compilation of additional information needed for
a country is encouraged.
2.33. Training on how to complete customs documents and advocacy. The proper completion
of customs declarations requires some specialized knowledge. To assist traders and to ensure
faster processing, customs normally prepare detailed instructions regarding the completion of the
declarations and conduct training for their own staff as well as for the business community. It is
good practice for compilers of trade statistics to participate in those training efforts so as to
acquire the ability to understand the data entry process. Such efforts can sensitize customs
officers, traders, brokers, etc., on the need to complete customs declaration forms and can be a
means of stressing the importance and uses of the information derived therein. Such training can
be properly seen as part of a broader range of trade statistics advocacy and quality assurance
activities (see chaps. V and IX for details).
Box II.6
Training and advocacy efforts – experience of the Philippines
In the case of the Philippines, the National Statistics Office (NSO), in collaboration with the
Central Bank, the Department of Trade and Industry, the Export Development Council, the
Bureau of Customs and the Philippine Export Zone Authority (PEZA), conducted a road show
for exporters, brokers and traffic managers for PEZA locators. Data requirements of the NSO in
generating IMTS, mandatory full completion of the box on value of imported raw materials,
insurance and freight value, as well as the importance and uses of IMTS, were emphasized
during the forums.
26
Annex II.A.
The single administrative document (SAD)
2.A.1. The single administrative document (SAD) is the documentary basis for customs
declarations in the European Union and in Iceland, Norway and Switzerland. The single
administrative document comprises a set of eight copies. Figure II.A.1 below contains a
representation of the first copy, which is the copy retained by the member State/country where
the export or transit formalities are carried out. More information is available from the European
Commission website (http://ec.europa.eu/taxation_customs/customs/procedural_aspects/
general/sad/index_en.htm).
Figure II.A.1
Single administrative document: copy for the country of dispatch/export
27
Chapter III
Non-customs data sources
3.1. Introduction. The present chapter refers to the recommendation contained in Chapter VIII
of IMTS 2010 on data compilation strategies that non-customs data sources be used to
supplement customs-based data so as to ensure full coverage of international merchandise trade
statistics. This chapter discusses such non-customs data sources as parcel and letter post records,
aircraft and ship registers, enterprise surveys (which are considered in more detail in chapter IV
of this Manual), foreign shipping manifests, data exchanges between countries, etc. Several
country examples are provided at the end of the chapter. The use of customs data sources was
covered in chapter II. Challenges and good practices in merging data obtained from customs and
non-customs sources are covered in chapter VII, which contains additional examples of the use
of non-customs data sources.
A. Overview
3.2. Country practices in the use of customs and non-customs data sources. For the majority
of countries, customs declarations remain the main source of data for the compilation of their
international trade statistics (see annex III.A). However, there is a considerable difference in this
regard between developed and developing and transitional countries.25
According to a survey
conducted by the United Nations Statistics Division in 2006, only 55 per cent of the developed
countries that replied indicated that they use customs declarations as their main data source,
compared with almost all (98 per cent) of developing and transitional countries. More developed
countries use additional data sources, such as administrative records associated with taxation (58
per cent) and enterprise surveys (59 per cent), as compared with only 22 per cent and 21 per cent
for developing and transitional countries, respectively. This is one of the consequences of the
abolition of customs controls among countries of the European Union.
3.3. Use of non-customs data sources. More active use of non-customs sources is also due to
the fact that certain kinds of transactions do not pass through customs and therefore information
about them needs to be obtained from other data sources maintained by other agencies. Table
III.A.1 in annex III.A shows that besides customs declarations, countries also use postal records,
tax records, currency exchange records, enterprise surveys, aircraft and ship registers, foreign
shipping manifests and reports of commodity boards. All these additional data sources can be
useful and maybe necessary in completing the coverage of international merchandise trade
statistics. Non-customs sources may be used also for the verification and cross-checking of
customs records.
3.4. Transactions frequently not covered by customs records. Transactions of the following
items may not appear in customs records:
Goods delivered through postal or courier services
25
There is no established convention for the designation of countries or areas in the United Nations system ―as
developed‖ or ―developing‖. In common practice, Japan in Asia, Canada and the United States of America in
Northern America, Australia and New Zealand in Oceania, and Europe are considered developed regions (see
http://mdgs.un.org/unsd/mdg/Host.aspx?Content=Data/RegionalGroupings.htm).
28
Electricity
Petroleum, gas and water through pipelines
Border trade (i.e., trade between residents of adjacent areas of bordering countries as
stipulated by national legislation)
Sales and purchases made by aircraft and ships in foreign ports
Sales and purchases of aircraft, ships and other mobile equipment
Transactions on the high seas
For these items, the compiling agency will have to use additional data sources to complete the
country‘s merchandise trade statistics.
B. Main types of non-customs data sources and their uses
3.5. The main types of non-customs data sources and their most typical uses are described
below. However, it should be noted that the importance and the use of particular data sources
may vary from country to country depending on national circumstances and needs.
1. Parcel post and letter post records
3.6. Universal Postal Union. The treatment of parcel post and letter post shipments by
customs offices is governed by the acts of the Universal Postal Union (UPU), which is currently
composed of 192 member States. The acts, which consist of the Constitution of the Universal
Postal Union, the General Regulations of the Postal Union, and the Universal Postal Convention
(UPC), are binding for all member States.
3.7. Forms CN 22 and CN 23. Among other matters, UPU deals with the issue of items (letter
post, parcels) that are subject to customs control. It provides, for example, that items weighing
less than two kilograms and with the value of their contents less than 300 special drawing rights
(SDRs), should bear a special form (CN 22). All other items should be accompanied by form CN
23. Form CN 22 contains a description of content by separate articles, their net weight and
value. Form CN 23, usually referred to as a customs declaration, requires additional information
which should be provided by the sender and include such statistically important indicators as
country of origin of goods, tariff number and customs value. The items and the respective forms
are to be presented to customs, which then makes its decision regarding clearance based on the
information provided on those forms.
3.8. Application of a threshold. If the values declared on the CN 22, CN 23 or other postal
forms exceed the threshold value adopted for trade statistics purposes, compilers should then
include those goods in trade statistics in full detail (commodity classification, value, quantity,
partner country, etc.). If the value of the individual transaction does not exceed the threshold,
then the treatment of the transaction should be consistent with the policy for compiling statistics
from other low-valued customs records. IMTS 2010 (para. 1.3) encourages countries to estimate
and include such flows if they are economically significant as determined by the statistical
authorities of the compiling country. The agency responsible for compilation of trade statistics
should contact postal authorities in order to ensure that the necessary information is collected and
passed on to that agency on a regular basis. Most of this information is now recorded
29
electronically and exchanged between postal operators in the form of EDI (electronic data
interchange) messages (see box III.1 below).
Box III.1
UPU/Customs EDI Messages
The Universal Postal Union has developed the UPU/Customs EDI message, known as postal
CUSITM/CUSRSP, for use between designated operators and customs, in line with WCO Data
Model 3. At its meeting held in March 2011, the WCO Permanent Technical Committee
endorsed the design and content of CUSITM/CUSRSP and agreed that these messages should be
referred to as "WCO-UPU Post-Customs electronic messages". UPU is currently finalizing this
updated customs declaration system, which will cover customs declaration treatment information
from end to end (sender to recipient), and provide for sender entry of declaration data, electronic
pre-advice of postal items to customs/border control, routing of the electronic information, basic
selectivity and rating functionality, and electronic response from customs to Post. System
specifications were scheduled to be completed by the end of 2012 and it was planned that the
first version of the UPU customs declaration system would be in place before September 2012.
One of the key advantages of this system is that it is not only available electronically, but also in
real time, which could substantially facilitate trade data collection by customs.
3.9. Private parcel delivery services. The compilation of data with regard to items delivered
by private parcel delivery services (e.g., couriers, express carriers, etc.) should follow a pattern
similar to that for governmental postal services, utilizing all information available. The agency
responsible for compiling the statistics should make special arrangements, either through
customs or with the parcel carriers directly, to ensure that the necessary information is passed to
them.
3.10. Increasing importance of parcel and letter post. With the rapid expansion of electronic
commerce, the international movement of goods by post and parcel delivery services (both
government and privately operated) is becoming more and more important; the compiling agency
should devise a strategy with the aim of developing a compilation procedure that ensures that
those merchandise flows are adequately reflected in trade statistics.
2. Aircraft and ships registers
3.11. Use of aircraft and ships registers. When aircraft and ships cross the borders of countries
as items of trade and the appropriate customs records are created, those records should be used as
the main source of information. However, in some countries, international trade in aircraft and
ships may not be recorded by customs even if they cross borders; also, customs records may be
incomplete or non-existent if those items do not cross customs borders. Under such
circumstances, countries may use national (or international) ship and aircraft registers for
evidence of a trade transaction, using change of ownership as it may be indicated in the register
as the basis for the compilation of trade statistics. In addition to the use of registers, documented
financial leasing agreements may indicate whether a change of economic ownership has
occurred. Chapter XXIII discusses in detail the compilation of data on the trade in ships and
aircrafts.
30
3. Enterprise surveys
3.12. Use of enterprise surveys. Obtaining information on international transactions in
electricity, petroleum, gas and water through pipelines or on sales and purchases made by aircraft
and ships in foreign ports or on the high seas, can be achieved by contacting the relevant
enterprises. If such transactions are highly concentrated in just a few enterprises, the compiling
agency can conduct a regular census (monthly or quarterly) of all involved enterprises to
complete the international merchandise trade statistics. If for certain kinds of transactions, the
number of involved enterprises is too large to make the holding a regular census feasible, then
the compiling agency could conduct regular enterprise surveys of the specific sectors (i.e.,
airlines and/or shipping companies).
3.13. Surveys to capture border trade. Border trade is generally understood as trade between
residents of adjacent areas of bordering countries. Such trade is typified by low quantities and
low value but high frequencies. Given the relatively low value of the individual transactions, this
kind of trade is frequently below the customs threshold and not recorded by the customs
administration. However, for certain countries, such cross-border trade is economically
significant and it is good practice for trade statisticians to capture the value, quantity and
commodity detail of these transactions on a quarterly or annual basis.26
Chapter IV provides
more detailed information about enterprise surveys and provides the example of the Informal
Cross Border Trade Survey conducted by Uganda.
3.14. Integrated approach to data collection. In the case of the use of non-customs data
sources, such as enterprise surveys, it is recommended that countries follow an integrated
approach to data collection and make use of business registers and enterprise identification
numbers in order to obtain the required information with minimal costs and burden on
enterprises. The integrated approach to data collection is of particular importance for the
fulfilment of additional information requirements, such as for goods for processing (including
obtaining information on change of ownership), intra-firm trade, etc., which often cannot be
satisfied by the use of customs declarations only. For further information on the integrated
approach to economic statistics, see chapter XI.
26
A similar form of trade is shuttle trade. IMTS 2010 defines ―shuttle trade‖ broadly as ―goods acquired by all
categories of travellers, including non-resident workers, to a significant scale as defined by national law‖ (see IMTS
2010, para. 1.16). However, para. 10.19 of the Balance of Payments and International Investment Position Manual,
Sixth Edition (BPM6) (Washington D.C. 2009) defines shuttle trade as follows:
Shuttle trade (sometimes called informal cross-border trade) covers transactions involving the purchase of
goods in an economy by travelers (nonresidents) who then transport these goods back to their economy of
residence where they are to be sold; goods purchased by travelers in their home country for resale abroad;
and goods purchased by travellers abroad in one economy and sold abroad in a second economy.
The OECD glossary of statistical terms defines shuttle trade as ―the activity in which individual entrepreneurs buy
goods abroad and import them for resale in street markets or small shops‖. Often the goods are imported without a
full declaration so that import duties can be avoided (see Organization for Economic Cooperation and Development
(OECD), ―Glossary of statistical terms‖ (Paris, 2007), available from: http://stats.oecd.org/glossary/). Earlier
discussions stress the informal character of this type of trade and its statistical underreporting (see ―Shuttle trade‖, a
paper presented at the Eleventh Meeting of the IMF Committee on Balance of Payments Statistics, Washington
D.C., 21-23 October 1998 (BOPCOM98/1/3).
31
4. Foreign shipping manifests
3.15. Use of foreign shipping manifests. Foreign shipping manifests may contain some of the
same information that is relevant to trade statistics as is found on customs declarations; they may
be of use as a source in cross-checking and/or supplementing information gathered from customs
declarations.27
Quantities in weight and number are usually available, as is information on freight
costs, general description of the commodities (although the commodity code may be missing),
names and addresses of the parties to the transaction and country of shipment. Such other
information as labour charges for packing, value of packages and fees for docking of cartage,
marine insurance, inland freight and some other commissions may also be available. The main
deficiency of foreign shipping manifests is that the value of the goods is frequently missing and
if the value is provided, it may summarize a number of tariff lines, may be entered in the
currency of the exporting country or may be on a free-on-board (FOB) basis.
3.16. Cooperation with port administrations. In some countries, port administrations produce
certain statistics from shipping manifests for port management purposes. Those statistics may
also be used to cross-check the data collected from customs declarations. Ideally, there should
be collaborative agreements between the statistical office, customs and port administrations,
aimed at mutual assistance in the compilation of trade-related statistics.
5. Currency exchange records and records of monetary authorities
3.17. Use of information from International Transactions Reporting Systems. Under an
international transactions reporting system (ITRS), banks and other financial institutions are
required to collect information on all transactions between residents and non-residents that have
a corresponding financial flow and which are settled through them. That information is then
supplied to the central bank for regulatory and/or statistical purposes. Those records may
provide a supplementary source of information and information for cross-checking the customs-
based trade statistics, as applicable.
3.18. Limitations in the use of data from an ITRS. An international transactions reporting
system is set up to reflect financial flows that do not necessarily correspond to the physical
movements of goods relevant to international merchandise trade statistics. Therefore, due care
should be exercised to separate cross-border merchandise flows from service, income, transfers,
and financial flows. Also, the partner-country attribution in ITRS would be based on the
residence of the transactors rather than on the country of origin of the goods and their country of
last known destination. Although ITRS may be used to provide an early broad estimate of total
merchandise trade, commodity or country detail is invariably less detailed. Quantity data may
not be covered at all.
3.19. Further limitations. There may be potential biases in the data if there are exchange
controls that may encourage understatement of exports and overstatement of imports; those may
27
A manifest is a transport document that serves as a tally-sheet, and gives a detailed summary of all bills of lading
(or air waybills) issued by a carrier (or its agent) for a particular voyage of a particular vessel or vehicle. For cargo
carrying vessels or vehicles, a manifest lists its consignor, consignee, number, origin, destination, value, and other
such information primarily for use by the customs authorities (see http://www.businessdictionary.com).
32
be harder to identify because an ITRS does not provide the possibility of inspection. Timing
issues also arise for an ITRS, since a financial transaction is measured at the time it is handled
through the banking system. This may result in a recorded time different from that when the
goods changed ownership (as required for balance-of-payments and national accounts statistics)
or that when the goods crossed borders (as used in international merchandise trade statistics).
Another disadvantage of ITRS is that it can combine two or more transactions in a single bank
settlement. Especially in those cases where these transactions concern both imports and exports,
the ITRS becomes less useful as a source of information.
3.20. Advantages in the use of data from an ITRS. The advantage of an ITRS is that sometimes
it can provide more timely total trade data than a survey or customs system. For example,
provision of data from an ITRS may be faster because customs declarations from some border
posts may take longer to arrive, or the central bank and/or commercial banks may have fully
computerized systems which operate faster than the systems used in the customs and/or
statistical offices.
6. Reports of commodity boards
3.21. Use of reports from commodity boards. Commodity boards are quasi-governmental or
commercial organizations established in some countries that monitor the production and
shipment of goods considered economically important for a country; they may also market the
products internationally on behalf of the producers. Those boards often issue reports that show
the volume of commodities exported during a particular period: monthly, quarterly or yearly.
The reports may include details, such as quantity of products sold (e.g., in metric tons), the value
of the sales, country of destination of the commodities, and (probably) the administrative costs
expended. If commodity board reports are consistently available, they may serve as
supplementary sources or for cross-checking of customs records, especially regarding the
information on quantities. In such a case, compilers are advised to analyse data from these
reports and to use them as appropriate. For an example of the use of information from
commodity boards, see chapter VII.
7. Administrative records associated with taxation
3.22. Use of administrative records associated with taxation. When customs records are not
available or are incomplete, it may be possible for administrative records associated with
taxation to be used in deriving trade statistics. This is particularly true where value added tax
(VAT) systems are in place, as is the case in the European Union (see chapter X for more
information).
8. Data exchanges between countries
3.23. Use of data exchanges between countries.28
In some circumstances, particularly where
non-reporting or errors in the collected data are prevalent, a data exchange29
between partners
28
Data exchanges between countries are usually exchanges of customs data. In the context of this Manual, non-
domestic customs data is considered a non-customs data source, as the term ―customs data‖ is used to refer to
33
can improve data quality and reduce the burden on traders and statistical compilers; exchanges
could cover all transactions or only a subset of transactions thought to involve special problems.
The exchange may be a permanent arrangement or may be limited to a specific time frame for
dealing with a temporary situation. Given the confidentiality aspect of the data exchange, it may
be necessary to have a signed agreement between the partners. Examples of country data
exchanges are provided in chapter IX, section C, and chapter X, section D, discusses further
possibilities for such exchanges. Chapter XXVI covers the issue of confidentiality in more detail.
3.24. Reconciliation studies. Before undertaking a data exchange, it is important to conduct a
detailed trade data reconciliation study (see chap. IX) to fully understand the differences between
the two partners' statistics and the adjustments that will be needed, for example, to derive each
partner's export data from counterpart import statistics (see chap. XVI on issues related to
partner-country attribution). Because of the greater customs scrutiny to which imports are
subjected by customs in most countries, it is usually more feasible to derive estimates of exports
from counterpart imports.
3.25. Advantages and disadvantages. Data exchange can substantially reduce reporter burden
and improve data quality, particularly if certain trade flows with a partner country are
underreported. It can also foster greater communication and cooperation between the customs
and statistical agencies in the two countries. In the case where the partner‘s imports information
is used as the country‘s exports information, the reporting burden on importers may increase if
they have to report additional data elements to meet the exporting country's needs. Further, such
exchange may reduce each partner's flexibility in modifying its classifications and processes.
Because of the need to align classification and processing schedules, it would be difficult to
implement data exchanges with multiple trading partners. It may also be difficult to implement a
data exchange when there are significant amounts of trade transiting one partner en route from
the other to a third country, or with distant partners where there may be large differences the
time of recording.
C. Country experiences
3.26. Example from the United States of America: obtaining information on goods transactions
through postal and courier services. In the United States international merchandise trade
statistics program, value-based exemption levels have been established to help alleviate filer
burden and reduce processing costs. As goods valued below these exemption levels do not
require complete filing, import and export low-value estimates are calculated each month.
Goods shipped by small package courier companies have been identified as a major component
of under-coverage, especially for exports. Therefore, the United States Census Bureau developed
a methodology for using a sum of courier and non-courier estimates. Data on low-value
shipments provided by major courier companies upon request served as a basis for the
methodology. The proportion of low-value trade to high-value trade was developed using data
domestic customs data only. Within a customs union, the term ―customs data‖ refers to customs data of all member
States.
29 One form of data exchange entails the use of one country's imports data as a substitute or input into another
country's exports data.
34
from the couriers over several months, and this proportion is used as a ―courier factor‖. The
courier data received each month is multiplied by this factor to produce courier low-value
estimates. The courier factors can be updated as needed by requesting more recent low-valued
trade data from the courier companies.
3.27. Example from Mexico: administrative and company records as non-customs sources. In
principle, administrative and company records can be used to validate, supplement or replace the
information provided by customs. In the case of Mexico, such non-customs records are used for
two specific cases. In the first case, the Ministry of Communications and Transportation provides
information on the volume of goods transported by air, sea, road and rail obtained from national
and international airlines as well as from public bodies such the maritime ports. This information
is used to supplement the information on mode of transport available from customs declarations.
Second, in the case of oil, Mexico‘s Working Group on Foreign Trade Statistics agrees on the
replacement of the customs records and the use of internal records from Petroleos Mexicanos,
the company responsible in Mexico for producing and exporting oil.
3.28. Example from Norway: use of ships registers. In Norway, the external trade of ships,
aircrafts and movable drilling rigs is not properly covered by data from customs. Concerning
ships, estimates based on change of ownership are used as an alternative. Statistics Norway
regularly receives information from the Norway‘s shipping registers (NIS/NOR) about new
registrations, cancelations and other changes in the registers. Based on this information, a letter
and a form are sent to the registered owner, asking for additional information. The full details of
this example is provided in chapter XXIII, annex B.
35
Annex III.A
Country practices in the use of different data sources
Results of a survey on national practices conducted in 2006
(Percentage)
Question
All 132
countries or
areas
Developed
economies a
Developing and
transitional
economies a
Yes No .. Yes No .. Yes No ..
Are customs declarations the
main source of data?
87.9 9.8 2.3 54.8 41.9 3.2 98.0 0.0 2.0
Do you use the following as
additional sources of data:
Parcel and letter post
records
31.1 62.1 6.8 9.7 87.1 3.2 37.6 54.5 7.9
Administrative records
associated with taxation
30.3 60.6 9.1 58.1 38.7 3.2 21.8 67.3 10.9
Currency exchange records
or other records of
monetary authorities
28.0 65.2 6.8 22.6 74.2 3.2 29.7 62.4 7.9
Enterprise surveys 29.5 59.8 10.6 58.9 38.7 3.2 20.8 66.3 12.9
Aircraft and ship registers 25.0 66.7 8.3 41.9 54.8 3.2 19.8 70.3 9.9
Foreign shipping manifests 15.2 78.8 6.1 6.5 93.5 0.0 17.8 74.3 7.9
Reports of commodity
boards
10.6 74.2 15.2 6.5 87.1 6.5 11.9 70.3 17.8
Source: International Merchandise Trade Statistics: Supplement to the Compilers Manual (United Nations
publication, Sales No. E.08.XVII.9 and Corr.1), table 1.2.
Note: Two dots (..) signify that data are unavailable.
a There is no established convention for the designation of countries or areas in the United Nations system ―as
developed‖ or ―developing‖. In common practice, Japan in Asia, Canada and the United States of America in
Northern America, Australia and New Zealand in Oceania, and Europe are considered developed regions (see
http://mdgs.un.org/unsd/mdg/Host.aspx?Content=Data/RegionalGroupings.htm).
37
Chapter IV
Enterprise and other surveys
4.1. Introduction. The present chapter provides details on enterprise surveys and other
surveys, identified in chapter III as one of the main non-customs data sources for international
merchandise trade statistics, and used for the compilation of trade transactions not covered by
customs records or for the collection of additional information. This chapter focuses, in
particular, on purposes and good practices in the organization of such surveys as well as on their
advantages and disadvantages as a trade data source. The need to adopt an integrated approach is
highlighted. This chapter also provides an overview of several typical surveys intended to collect
missing data and surveys conducted to collect some additional relevant information. The use of
enterprise surveys in the case of a customs union is discussed in chapter X.
A. General description of enterprise and other surveys
4.2. Use of surveys. Customs records are the main and usually preferred data source of trade
information (see IMTS 2010, para. 8.2). Non-customs sources, such as surveys, are
recommended to be used as substitutes for available customs records only if they provide a cost-
effective means of improving the quality of trade statistics (see IMTS 2010, para. 8.9).
Therefore, in most countries, enterprise surveys are not extensively applied for the compilation
of merchandise trade statistics. Member states of customs unions can be an exception, as customs
records might not exist for trade among the members of the union (see annex III.A). For
example, in the case of the member States of the European Union, enterprise surveys are a main
source of information for international merchandise trade statistics. Data compilation in the case
of a customs union is discussed separately in chapter X.
4.3. Surveys designed to collect missing data. Enterprise or other surveys, like border surveys
or household surveys, can be useful in obtaining information on transactions that are not
processed through customs. Specifically, the following items recommended in IMTS 2010 for
inclusion as part of the international merchandise trade statistics may require surveys as the
principal data source: (a) ―goods acquired by all categories of travellers, including non-resident
workers, to a significant scale as defined by national law‖ (IMTS 2010, para. 1.16), also referred
to as ―shuttle trade‖, (b) trade in electricity, gas, oil and water (ibid., para. 1.24), (c) goods
dispatched or received through postal or courier services (ibid 2010, para. 1.34); (d) fish catch,
minerals from the seabed and salvage (ibid., 2010, para. 1.31) and (e) bunkers, stores, ballast and
dunnage, acquired or landed by national aircraft and vessels outside the economic territory of the
compiling economy (IMTS 2010, para. 1.32).
4.4. Requirements and integrated approach in data compilation. Carrying out enterprise
surveys entails the commitment of additional resources on the part of the national statistical
authorities. Enterprise surveys require more time in planning, execution and follow-up than that
required to obtain information from administrative sources. Moreover, a business register (or
other sources of survey frame) should be in place to draw a representative sample of enterprises
for the purpose of the surveys. The samples should be adequate for the concerned economic
sectors and stratified by enterprise size and geographical areas, as necessary and feasible.
Considering the survey requirements and the high costs of conducting surveys, countries are
38
advised to follow an integrated approach to economic statistics in order to make full use of
existing statistical information and infrastructure for data compilation. Some information on the
standardization of surveys is given in section B below. For further details on the integrated
approach to economic statistics, see chapter XI.
4.5. Merging of data from enterprise and other surveys with data from other sources. One
major issue for data compilers is how to incorporate data from enterprise surveys with data
obtained from other sources (predominantly from customs records) as the levels of detail, timing,
etc., might differ significantly. Chapter VII discusses this issue in more detail and provides
further guidance.
B. Organization of the surveys
4.6. General guideline. As a general guideline, it is good practice to ensure that the enterprise
and other surveys that are conducted for IMTS-related purposes possess the following
characteristics: (a) survey design (survey frame, target variables, etc.) is in compliance with the
recommendations of IMTS 2010; (b) surveys are organized and conducted as an integral part of
the national survey programme in order to reduce the resource requirements by eliminating the
possibility of duplication of work and by using applicable common concepts, classifications,
questionnaire designs and sampling techniques, and to achieve maximum possible consistency
with other areas of economic statistics and; (c) the reporting burden of the respondents is
minimized in view of their increasing reluctance to complete many separate questionnaires. In
this connection, it should be emphasized that the success and sustainability of the trade statistics
surveys can be ensured only on the basis of effective institutional arrangements (see chap.V).
4.7. Business registers and survey frames. A business register is generally the main source of
the sampling frame for enterprise surveys. The establishment of such a register is essential for
the full coordination of source data that relate to the same business units. Countries with a high
proportion of small and micro enterprises might complement the existing business register with
listings of enterprises from other sources and with area frames based on agricultural, economic
and population censuses. The central survey frame, consisting of a business register in
combination with other enterprise listings and area frames, represents the backbone of the
collection processes of source data that interface with businesses through direct profiling,
surveys, feedbacks and use of administrative records. A good central frame should contain data
about the businesses, including their names, addresses, economic activity, variables of size and
potentially information about the life cycle of the firm. For operational reasons, a unique
identifier could be assigned to each entity in the register and in the central survey frame. This
unique identifier should be clearly mapped to the business number used by the administrative
authorities so as to ensure that administrative data are correctly applied to the various entities in
the register.
4.8. Consultation with respondents and selection of data-collection methods. Consultation
with potential respondents is an essential requirement before the finalization of the questionnaire
design and decision-making on the data-collection method. Since statistical questionnaires are
frequently filled-out by accountants, the participation of another person or other person(s) of the
enterprise with a good knowledge of the survey questions should be encouraged. The choice of
39
the survey data collection method (mail, telephone, electronic, personal interview, etc.) depends
on the country‘s resources, preferences and characteristics of the respondents, and may vary for
different sectors of the economy. It is good practice to give the respondents an opportunity to
assess the questionnaire as well as the selected data-collection method in order to facilitate the
amendments needed to increase survey efficiency and to ensure better harmonization with other
economic surveys.
4.9. Standardization of surveys. Standardization of surveys and questions applied across
different industries contributes to consistency of the collected information and facilitates an
integrated statistical production process. Standardization should be comprehensive and
encompass survey design, sample frame and questionnaire design. Survey design may need to
compensate for a lack of willingness among data providers to complete many separate survey
requests sent to them each year. A coordinated modular approach carried out through annual
continuous data- collection instruments with intra-annual collection rounds, instead of separate
specific-purpose surveys, offers the possibility of reducing response burden and cost while
providing flexibility in case of changing information needs.
4.10. Survey forms. Special data-collection forms or electronic data requests should be
designed and sent to the selected enterprises on a regular basis at pre-announced dates. Such
surveys could request information similar to that normally contained in customs declarations. For
simplification, enterprises may be requested to report cumulative trade from the beginning of the
year, with the last month's trade separately identified, and to keep documents confirming their
export-import transactions for a certain period of time, for verification purposes. Those
documents may include copies of contracts, invoices, certificates of origin of goods, etc.
4.11. Simplified survey forms. It is advised that a simplified survey form be used for enterprises
whose foreign trade turnover does not exceed an established minimum. Such a form may require
that information be provided only on the statistical value of exports or imports for aggregated
groups of commodities, by partner country.
4.12. Determining the adequate sample of enterprises for the survey. The strategy for
determining the adequate sample of enterprises for a survey depends on the specific population
of enterprises in the concerned economic sector. Some economic sectors are dominated by only a
few large companies. In such cases, all those companies should be surveyed. This is generally
the case for the trade in electricity, gas, and oil, as well as for courier services, and for national
aircraft operators acquiring and landing goods abroad. Other economic sectors have many
enterprises participating in international trade, and adequate sampling should then be applied.
This could for instance hold for the shipping sector, which generally consists of a few large and
many medium-sized and small companies in the population of enterprises. Ideally, the
information on shipping companies is available from the business register and sampling can be
conducted using a stratified approach based (for instance) on enterprise size and location. It is
generally advised that all large companies and an adequate proportion of the small and middle-
sized ones be included in the sample.
4.13. In the case of fisheries, for example, while exports and imports are dominated by big
companies in many countries, this might not be the case in others. If there is a wide spectrum of
40
small and medium-sized enterprises in a country, as well as significant activity in the informal
sector (e.g. family owned), which together contribute noticeably to such trade, it might be
necessary to survey them. Such surveys would require obtaining a sample frame using the
information provided by economic and population censuses. This may also entail the need to
supplement an enterprise survey with an adequate household survey (based on area frame
sampling, since only coastal areas are of importance).
C. Advantages and disadvantages of surveys
4.14. Advantages. Once in place, enterprise surveys will have certain advantages. For
example, survey forms are designed to conform to acceptable methodology, and satisfy the needs
of various fields of statistics, and can be revised as frequently as necessary.30
Also, established
contacts at the enterprises may allow compilers to obtain prompt confirmations or corrections in
the case of doubts about the reliability of the information submitted.
4.15. Challenges in the use of surveys. Major challenges encountered in conducting a survey
include: (a) frequent correction by enterprises of data previously submitted, leading to substantial
revision in the preliminary data; (b) high cost of implementation; (c) additional reporting burden
on enterprises; (d) difficulty of ensuring proper completion and submission of survey
questionnaires; (e) difficulty of obtaining sufficiently detailed and reliable information (e.g., at
the level of six-digit Harmonized Commodity Description and Coding System (HS) codes) on
value and quantity of trade due to the limited sample sizes of surveys and; (f) the case where not
all of the required information may be available to those completing the enterprise surveys. It
may be helpful for countries at the initial stage of organizing such surveys to take advantage of
the experience of other countries.
D. Examples of enterprise surveys conducted to collect missing trade data
4.16. Survey of airline operators and of enterprises at airports. Data on the acquisition or
landing of bunkers, stores, ballast and dunnage by national aircraft outside the economic territory
of the compiling economy are generally not available from customs. Also, goods supplied to
foreign aircraft at national airports are frequently not covered by the regular customs recording.
Therefore, national airline operators and enterprises active at airports may be requested to
provide the information needed to include these transactions in the international merchandise
trade statistics. Such operators and enterprise could either complete a monthly questionnaire of
transactions involving bunkers, stores, ballast and dunnage, or send a predetermined set of data
records every month. In either case, the required information could be submitted electronically.
The requested data elements on these transactions would, ideally, be the same as for the data
collected through the customs declarations. Necessary elements are the date of the transaction,
the trade flow (imports, re-imports, exports or re-exports), the HS commodity code, the trading
partner country and the value, net weight and supplementary quantity of the transaction.
30
Compilers may find it practical to use the same survey form to collect data on a physical movement basis to
ensure consistency with IMTS, Rev.3 recommendations and on a change-of-ownership basis to obtain information
needed for System for National Accounts (SNA)/balance of payments statistics.
41
4.17. Border surveys. Information on shuttle trade, i.e., ―goods acquired by all categories of
travellers, including non-resident workers, to a significant degree as defined by national law‖,
could be obtained through border surveys. Boxes IV.1 and IV.2 below presents the experiences
of Uganda and Turkey in the conduct of such surveys.
Box IV.1
Experience of Uganda: Informal Cross Border Trade Surveys
Background. Uganda conducts monthly Informal Cross Border Trade (ICBT) Surveys to collect
information on unrecorded trade transactions in goods with its neighbours. The baseline study
carried out in 2003 revealed that informal trade was significant and involved both agricultural
and industrial products. Therefore, the exclusion of informal trade in the compilation of
merchandise trade statistics had understated the levels of intra-Common Market for Eastern and
Southern Africa (COMESA)/East African Community (EAC) trade and the overall international
merchandise trade statistics in the balance-of-payments goods account.
Scope of the survey. Currently, 20 customs stations and 4 bus terminals where informal trade
flows were found to be significant are being monitored on a regular basis. The selection of these
stations was based on the volume of informal trade being transacted, availability of supporting
Government institutions (e.g. customs offices, immigration and police), security and availability
of good infrastructure among others. In conducting the Informal Cross Border Trade Survey
(ICBT), the general trade system approach is used. During data collection, the following
transactions are recorded as informal trade in merchandise: (a) goods not declared to customs
authorities and, whether in small or large quantities, carried on vehicles, bicycles, the head, and
wheelchairs; (b) goods partially declared to customs authorities, which could be identified and
quantified by traders and data collectors. The goods excluded in the Survey recording are those
in transit, and goods properly declared to customs authorities.
Data compilation. The direct observation technique used in collecting data entails the strategic
positioning of enumerators at border posts to record all merchandise entering or leaving the
country by observation. All traded goods that are not recorded by customs authorities are
captured, at a point of the crossing of the customs stations in the counter books. Prices of these
commodities are collected at the border on a daily basis to provide estimates for FOB and CIF
values for exports and imports respectively. The data-collection instruments used include the
following: the field instruction manual, counter books, summary form A, calculators, lists of
units of measures and a weighing scale among others. The information collected is summarized
in summary form A on the following variables: customs station, commodity name, quantity,
price, unit of measure, country of origin/destination, mode of transport, date and day of the week.
The data are processed and identified by international commodity codes and nomenclature before
they are merged with customs data. Since the data-collection activities cover a period of two
weeks in a month, estimates for entire months are derived using an uprating model.
Box IV.2
Example from Turkey: survey of the shuttle trade
Estimations by Turkey‘s shuttle trade are based on a Survey for the Shuttle Trade (see figure
below) conducted quarterly by the Statistics Institute of Turkey at specific border crossings. To
estimate the shuttle trade, the expenditures on the goods are expanded by the number of foreign
42
visitors who are involved in the shuttle trade, which is estimated by using the ratio of the number
of foreign visitors, who in the departing visitors survey are reported as having purchased
products in bulk to be sold abroad, to the total number of foreign visitors who responded to this
survey. The box IV.2 Survey for the Shuttle Trade has been conducted since 2003.
Form for the Shuttle Trade Survey
E. Examples of enterprise surveys conducted to obtain additional information
4.18. Survey on Insurance and Freight Costs for Import Trade. The Census and Statistics
Department of China, Hong Kong SAR, has been compiling a set of import statistics valued on a
free on board (FOB) basis to facilitate analysis of the merchandise trade balance and comparison
of trade statistics with those of other economies. The imports FOB valuation was derived from
the imports CIF valuation based on data obtained from the Survey on Insurance and Freight
Costs for Import Trade (IMS), which is a sample survey conducted since 1996 on a monthly
basis. The main objective of IMS is to collect information on the insurance premium and freight
cost incurred for imports of goods. Under the current sample design, trade items in import
declarations are stratified by two variables, namely, Harmonized System (HS) section and mode
of transport. Within each stratum, a proportionate random sample is drawn from the monthly
import declarations, with the selection probability of each element proportional to its trade value.
The total sample size determined on the basis of desired precision and resources availability is
about 3,000 trade items per quarter. Data are collected by contacting the trader or company
listed on the import declaration using the computer-assisted telephone interviewing (CATI)
43
approach. Various measures, such as implementation of validation checks in the CATI system,
online monitoring on the performance of individual field officers and verification of a sample of
the enumerated cases by field supervisors, are adopted to safeguard the quality of the collected
data.
4.19. Survey on Trade involving Outward Processing of China, Hong Kong SAR, in the
Mainland of China. The outward processing (OP) of China, Hong Kong SAR, in the mainland of
China involves the exportation of all or part of the raw materials or semi-manufactures from or
through Hong Kong to the mainland for processing, with a contractual arrangement for
subsequent re-importation of the processed goods into Hong Kong. As trade of an OP nature
cannot be delineated under the existing system of recording merchandise trade statistics, the
Census and Statistics Department has been conducting the Survey on Trade involving Outward
Processing in the Mainland of China (OPS) to assess the economic impact of OP activities. OPS
is a monthly sample survey which has been conducted since the third quarter of 1988. All import
and export declarations in respect of the trade of China, Hong Kong SAR, with the mainland and
re-exports of goods of Mainland origin to other places are employed as the sample frame for the
survey. Under the current sample design, the declarations are first categorized by trade flow and
commodity groups. For re-exports of mainland origin, the declarations are further categorized
by three markets, namely the United States of America, the European Union and other places. A
stratified sampling method is adopted for the sample selection. The total sample size is about 28,
500 declarations per quarter. Data are collected from the traders and enterprises on the
declarations using the computer-assisted telephone interviewing (CATI) approach.
Part two. Data compilation
47
Chapter V
Institutional arrangements
5.1. Introduction. The present chapter describes the purposes and characteristics of effective
institutional arrangements, and the governance and mechanism of cooperation, as well as the
activities required to ensure the improvement of such arrangements and their positive impact on
data quality. This chapter is based on the recommendations contained in chapter VIII of IMTS
2010, on data compilation strategies and is linked to chapter I of IMTS 2010-CM regarding the
legal framework for merchandise trade statistics. The annexes to the chapter provide examples of
institutional arrangements under various country circumstances.31
A. Purposes of institutional arrangements
5.2. Institutional arrangements. Usually, several governmental bodies participate in the
compilation of a country‘s official trade statistics. The most important governmental entities
participating in IMTS compilation are national statistical offices, customs administrations,
central banks, tax authorities, the ministry of trade and other specialized governmental bodies
such as, e.g., commodity boards, trade development boards, etc. The institutional arrangements
are understood as constituting a set of laws, regulations and agreements between the involved
agencies on the division of the responsibilities in the collection, processing, compilation and
dissemination of external trade statistics of a country. The mandates and the main areas of
activity of those agencies are usually defined by national law which provides the foundation for
the working out of detailed institutional arrangements.
5.3. Purpose of institutional arrangements and international recommendation. The purpose of
institutional arrangements is to ensure that high-quality national trade statistics are put at the
disposal of national and international users in a timely and convenient manner, and that the
statistical process is carried out with the maximum possible efficiency. In order that these goals
may be achieved, the details of the responsibilities of the involved agencies should be elaborated,
agreed upon and documented. IMTS 2010 (para. 8.17), recommends that countries consider the
establishment of the institutional arrangements necessary to ensure the compilation of high-
quality trade statistics as a matter of high priority and periodically review their effectiveness.32
5.4. In particular, the establishment and maintenance of effective institutional arrangement is
necessary to ensure that (a) the needs of all interested governmental agencies and the general
31
The scope of this chapter does not include institutional arrangements between international organizations active in
compilation, dissemination and analysis of trade statistics. Information on this matter is available from the UNSD
website, at http://unstats.un.org/unsd/trade/imts/cooperation.htm and the website of the Inter-agency Task Force on
International Merchandise Trade Statistics at http://imts.wto.org/task_e.htm.
32 When adopting the new recommendations for IMTS at its forty-first session in 2010, the Statistical Commission
explicitly ―requested that greater attention be given to the strengthening of institutional arrangements in countries to
ensure that proper national coordination mechanisms exist for the compilation of high-quality international
merchandise trade statistics; and also requested that cooperation with compilers of statistics on international trade in
services, the balance of payments and national accounts be ensured‖. See Official Records of the Economic and
Social Council, 2010, Supplement No. 4 (E/2010/24), chap. I, sect. B, decision 41/103, para. (d).
48
public are taken into account, (b) the applicable international standards are followed by all
involved agencies, (c) all available resources are used in the most effective way, (d) proper
quality assurance procedures covering various aspects of data production and dissemination are
developed and executed in a transparent manner and (e) public confidence in the disseminated
data is assured, so that the statistics are used to the maximum extent possible.
B. Characteristics of effective institutional arrangements
5.5. Key characteristics of effective institutional arrangements. Depending on the country‘s
legal framework, the structure of its government, available resources and other considerations,
various institutional arrangements might exist and result in acceptable trade statistics. At the
same time not all types of such arrangements are equally effective. In this connection, IMTS
2010 (para. 8.16), identifies several key characteristics of effective institutional arrangements,
namely:
(a) Designation of only one agency responsible for the dissemination of official trade
statistics;
(b) A clear definition of the roles and responsibilities of all agencies involved;
(c) Establishment of formalized working arrangements between the involved agencies,
including agreements on holding inter-agency working meetings, as needed, and on the access to
microdata collected by those agencies.
5.6. The responsible agency. It is good practice for the agency designated to be responsible
for the compilation and dissemination of official trade statistics to be given the necessary
authority and responsibility for monitoring and coordinating various aspects of the whole
statistical process. The establishment of such an agency is also essential from the user
perspective, as it reflects a clear designation of a single source of official data and contact point
for any enquiries. This raises the confidence of users in the quality of the statistics and promotes
its wide and effective use. In particular, it is good practice for this agency to be responsible for:
(a) The specification and implementation of the appropriate methodology for the compilation
of the country‘s trade statistics in accordance with the internationally adopted standards and best
practices;
(b) The development and the implementation of the appropriate inter-agency data
compilation arrangements;
(c) The dissemination of the official trade statistics to users both domestically and
internationally;
(d) Serving as focal point for consultation with trading partners on data reconciliation and
data exchange and the representation of the country at various regional and international forums
dealing with foreign trade statistics.
5.7. Rights and responsibilities of the involved agencies. It is good practice to ensure that the
collective responsibilities of the agencies involved in the compilation of trade statistics cover all
elements of the statistical process and are distributed in a manner that leads to the most effective
use of the available resources and to high-quality data. The definition of the rights and
49
responsibilities of all involved agencies should be unambiguous in order to minimize
misunderstandings that might lead to a duplication of work or lack of attention to certain tasks.
5.8. Formalized arrangements between the involved agencies (memorandum of
understanding). It is good practice to ensure that the establishment of formalized arrangements
between the agencies involved in the compilation of international merchandise trade statistics is
documented through appropriate means such as a memorandum of understanding (MoU), which
would, inter alia, include provisions for holding inter-agency working meetings and for accessing
microdata collected by those agencies. In this connection, it is recognized that the content of any
MoU will have certain limitations imposed by the applicable national legislation (due, for
example, to the stipulation that the rules of inter-agency cooperation should be written in such a
way as not to risk the disclosure of confidential information). It is good practice for the MoU to
be worked out (under appropriate delegated authority) and signed by the appropriate units of the
larger governmental agencies so as to facilitate their effective cooperation.33
The formal
arrangements should be complemented by the informal working agreements between the relevant
units of the involved agencies to ensure the effective implementation of the agreements.
5.9. Contents of a memorandum of understanding (MoU). In general, a good MoU would
contain:
(a) A preamble describing reasons for its establishment;
(b) A mission statement defining the scope and overall purpose of the MoU;
(c) An outline of a long-term work programme, a commitment to develop and implement
midterm (e.g., biannual or annual) action plans designed to achieve the work programme‘s
objectives (see sect. E for details) and a cost-sharing agreement;
(d) A list of participating agencies together with a clear description of their rights and
responsibilities in the context of the agreed work programme, covering data collection, data
transmission, data compilation, treatment of confidentiality, data quality, metadata and
dissemination as well as methodological improvements (e.g., development of a national
commodity classification, elaboration of methods of statistical valuation, etc.);
(e) The terms of reference and rules of procedure of the interagency body responsible for
monitoring MoU implementation (e.g., a permanent committee);
(f) The terms of the MoU, including its effective date.
C. Main types of institutional arrangements
5.10. Different institutional arrangements. The kinds of institutional arrangements in countries,
and their governance and mechanism of cooperation, depend on many factors. The designation
of the national statistical office as the agency responsible for the dissemination of official
statistics and, the coordination of data collection and processing, is the most common practice in
33 For example, the national statistical office might sign the MoU not with the national customs authority as a whole,
but rather with its statistical unit which can result in the establishment of more effective working arrangements, as
such a unit may be dependent, to some degree, on the national statistical office regarding statistical methodology and
will benefit from the closer cooperation with the national statistical office.
50
countries. Responding to the UNSD questionnaire in 2006, 78 per cent of countries confirmed
that the compilation and dissemination of IMTS are normally the responsibility of national
statistical offices.34
However, in the remaining countries, the official international merchandise
trade statistics are compiled and disseminated by other governmental agencies, such as statistical
departments of the customs administrations, central banks or a dedicated unit in a ministry.
1. The statistical office as the responsible agency
5.11. Typical arrangements. The statistical office bears the overall responsibility for a
country‘s official trade statistics, including issuance of methodological guidelines, raw data
editing and processing, database maintenance and dissemination of official statistics. The
customs administration bears responsibility for the collection of the basic records and for
supplying the statistical office with these records on a regular basis: normally, customs would
carry out some editing of records before passing them to the statistical office. Central banks and
other governmental agencies provide additional information on trade flows not covered by
customs records. The statistical office further edits all input data and merges them into a
consistent data set.
5.12. Cooperation with other involved agencies. The reliance by the statistical office on data
from sources external to itself requires close cooperative relationships with all governmental
departments and agencies that provide data. The statistical office and the statistical unit of
customs - the largest data supplier - along with other source agencies, should establish
memorandums of understanding so that the roles and responsibilities of each party with regard to
all aspects of the production and distribution of official statistics are clearly defined and
elaborated in sufficient detail. It is good practice to periodically review the memorandums of
understanding and update them as needed.
Box V.1
Administrative agreement between the Federal Statistical Office (FSO) (the responsible
agency) and the Federal Fiscal Authority (FFA) of Germany
The agreement between the FSO and the FFA of Germany describes the cooperation between
both parties concerning the exchange of statistical customs data on external trade. It is not a legal
act in a narrow sense but is nevertheless binding for both parties. One important feature of the
agreement is that the main points and the legal basis are established in the main paper. Technical
and other details, which may change frequently, are specified in the annex. Through this
arrangement, change in these details is facilitated without changing the main agreement. The
main topics covered by the administrative agreement include:
1. Transmission of the statistical customs data
(a) Scope: The legal basis for the transmission and its scope is described here. The FFA commits
to transmitting the relevant statistical data to the FSO after technical and methodical
examination. The data are checked for formal validity (code checks) and if a mistake is detected,
the responsible customs unit or the participant is obliged to correct the data. Only correct
(plausible) data are transmitted to the FSO. Further details are specified in the annex.
34 See International Merchandise Trade Statistics: Supplement to the Compilers Manual (United Nations
publication, Sales No. E.08.XVII.9 NB E only and Corr. 1), para. 1.3.
51
(b) Form of transmission: Basic details for the transmission of the data (institutions involved in
data transmission, and data format) are specified. Further details (e.g., a list of variables) are
specified in the annex.
(c) Time and deadline of data transmission: The FSO retrieves the relevant data electronically on
a daily basis.
2. Corrections
Corrections of already retrieved statistical data are made through a specific revision procedure.
3. Transmission of master data
The legal basis for the transmission of master data (e.g., identification number, name, address of
the company, contact persons) is mentioned here. Master data are updated on a monthly basis.
Details are specified in the annex.
4. Statistical confidentiality and tax secrecy
The FSO commits to obeying the legal obligations concerning statistical confidentiality and tax
secrecy.
5. Contact persons
Both the FSO and the FFA commit to naming contact persons for clarification of methodical and
technical issues, as specified in the annex.
6. Application and amendment
The administrative agreement can be updated or changed by mutual agreement.
Box V.2
Table of contents of the Statistics Canada/Canada Border Services Agency (CBSA)
Memorandum of Understanding
The Memorandum of Understanding contains seven sections as follows:
Section I – General Roles and Responsibilities
Section II – Data Collection
Section III – Data Transmission
Section IV – Data Disclosure and Dissemination
Section V – Data Quality
Section VI – Harmonized System
Section VII – Costs
Each of the above sections is further subdivided into three subheadings, namely:
1) CBSA‘s Roles and Responsibilities
2) Statistics Canada‘s Roles and Responsibilities
3) Joint CBSA/Statistics Canada Roles and Responsibilities
Finally, the MoU contains the following lists:
List 1 – Import CBSA Transmission Data Variables
List 2 – Canadian Automated Export Declaration (CAED) Record Layout
List 3 – Import HS Update Data Variables
2. The customs administration as the responsible agency
5.13. Typical arrangements. In this case, customs is responsible for all activities ranging from
the collection of basic records to the dissemination of the official international merchandise trade
statistics. The statistical office and the central bank may provide supplementary data and would
normally make the adjustments necessary to publish aggregated trade data in accordance with the
52
SNA/BOP requirements. It is good practice for customs to use additional data sources as
required, and to implement an appropriate quality assurance programme in order to ensure that
the detailed trade statistics disseminated by customs are of the necessary quality.
5.14. Cooperation with other involved agencies. Two conflicting requirements that customs
usually face are: (a) the need to diminish barriers to the flow of trade, which leads to the
simplification and reduction of reporting requirements imposed on traders; and (b) increased the
need of users (both government agencies and the business community) for the availability of
trade data of enhanced quality and detail within a shorter time frame. To meet these
requirements and to ensure that any necessary additional sources of data are being used and that
compilation procedures comply with the recommended methodology, customs should closely
cooperate with other agencies, particularly the statistical office.
3. Central bank as the responsible agency
5.15. In a small number of countries, the central bank is responsible for the compilation and
dissemination of official international merchandise trade statistics. Under this arrangement, the
bank receives the customs records on a regular basis, and compiles and disseminates the trade
statistics with an approach similar to that used in the statistical office-led compilation described
above. Central banks functioning as the government agency responsible for trade statistics
should ensure that these statistics are compiled and disseminated in accordance with the
international recommendations for merchandise trade statistics. It is good practice for
recompilation and dissemination of trade statistics on the BOP basis to be undertaken as a
separate activity so as to allow a proper focus to be placed on the respective purposes and
characteristics of IMTS and BOP statistics.
4. Other governmental bodies as the responsible agency
5.16. Other governmental bodies such as ministries of economy and ministries of trade can also
be designated as the agencies responsible for official international merchandise trade statistics.
Such arrangements may result in the production of high-quality trade statistics if the designated
body follows the recommendations in IMTS 2010 and the good practices described in the present
Manual.
D. Towards improved institutional arrangements
5.17. Improvement of institutional arrangements. It is recommended that countries
periodically review the effectiveness of their institutional arrangements (IMTS 2010, para. 8.17).
Such reviews are particularly valuable for countries that face challenges in the provision of
timely high-quality international merchandise trade statistics, as those difficulties can frequently
be traced to ineffective institutional arrangements. The characteristics of effective institutional
arrangements have been described in section B. To the extent that these institutional
arrangements are established in national legislation or relevant administrative regulations, they
usually cannot be changed in the short term, if at all. However, at the same time there exist a
number of steps that interested countries can undertake in the short run, which can yield positive
results in near the future. The following good practices should be taken into consideration, as
53
applicable.
1. Establishment of an inter-agency coordination committee and working groups
5.18. Tasks of the coordination committee. A permanent coordination committee would
usually consist of the representatives of the top management of the involved agencies (or units,
as applicable) and would act as an ―upper-level‖ body concerned with the formulation and
monitoring of the implementation of a long-term strategy aimed at ensuring the high quality of
official international merchandise trade statistics. Such a committee will promote systematic
cooperation between the involved agencies in the identification and enactment of the measures
that are within their prerogatives. To ensure that the work of such a committee is effective, it is
good practice for its members to agree on and document the objectives and the rules of procedure
of the committee.
5.19. Meeting procedures of the coordination committee. It is good practice for the work
programme of such a committee to be elaborated as soon as possible so as to facilitate the
functioning of the committee; further, the agendas of the forthcoming meetings should be
circulated well in advance and the meeting‘s minutes kept, so that the process is made
transparent and the implementation of the reached decisions can be evaluated. Responsibilities
for the logistics of the activities should be distributed among the representatives of each
participating agency so as not to overburden the responsible agency.
5.20. Establishment of technical working group(s). To ensure that the strategic and managerial
decisions of the permanent committee are implemented, it is a good practice to establish a
technical working group (or groups), which reports to the committee. These working groups
would be dealing on the regular basis with the detailed technical issues such as the compliance of
data-collection procedures with the adopted trade statistics methodology, organization of
effective data processing and data exchange, including the use of compatible information
technology (IT) platforms, coordination of outreach activities, etc. It is good practice for the
working group to formulate its work programme and periodically report on its implementation to
the committee.
2. Activities of the coordination committee and working groups
5.21. Activities of the permanent committee and the technical working group. It is advised that
the following activities be included in the work programme of the committee and working group,
as applicable, taking into account their respective mandates:
(a) Formulation of a long- term strategy and actions for improving trade statistics. A long-
term strategy is based on the review of the existing institutional arrangements and formulates
actions for their improvement, as required and appropriate. Further, it entails the establishment
and implementation of a MoU between the responsible agency and other governmental bodies
involved in the compilation of trade statistics (see paras. 5.8 and 5.9 for details). The strategy
should foresee such activities as the identification of data gaps and existing inefficiencies (e.g.,
unused data sources, duplication of work, communication barriers, etc.) and include the
formulation and timing of actions to remove them;
54
(b) Discussion of changes in custom regulations and other relevant regulatory provisions.
The revision of the regulatory provisions may affect the availability and quality of information
relevant for the compilation of international merchandise trade statistics. Therefore, the agencies
involved in the preparation of such regulations and in the compilation of international
merchandise trade statistics should discuss these changes in a timely manner in order to take into
account the requirements for the compilation of trade statistics. In particular, the arrangements
should allow for amending the rules on customs recording in order to maximize their usefulness
for trade statistics;
(c) Development of appropriate non-customs sources of data. Non-customs data sources
need to be developed as required to achieve the full coverage of trade statistics. The responsible
agency, together with the other members of the coordination committee, should develop an
action plan which would ensure that such data sources are identified and the necessary
agreements with other governmental or non-governmental bodies are reached to allow access to
use of their administrative data, or that additional data are collected through a national survey
programme;
(d) Adoption of an integrated approach. The compilation and dissemination of international
merchandise trade statistics should be seen as an integral part of the national statistical
programme (see chapt. XI for details). Trade statisticians should cooperate with customs, other
data providers and compilers of business statistics and statistics on international trade in services
to make the best use of the available information and to realize efficiency gains in data
compilation. Close cooperation with compilers of other statistics can both improve the
international merchandise trade statistics and be beneficial to other statistical domains. For
example, in view of limited resources and to ensure that work is not duplicated, it is good
practice not to initiate any additional surveys of traders without proper consultations with the
compilers of enterprise statistics, as it might be possible to amend existing surveys so as to
incorporate trade statistics requirements. On the other hand, compilers of international
merchandise trade statistics can assist colleagues who are responsible for statistics on
international trade in services by, for example, passing on to them any available information on
cost of goods transportation and insurance. The necessary working arrangements have to be
established and systematically implemented;
(e) Modernization of the IT infrastructure and inter-agency data exchange. The
arrangements between the involved agencies must ensure the permanent access to the relevant
primary data and facilitate consultations and revisions that are made during the statistical
production process. It is good practice for the responsible agency to, inter alia, (i) take into
account the technical systems available at the source agencies, and in particular, work closely
with the customs administrations to incorporate validation rules into the automated data-
collection system(s); (ii) maximize the use of modern information technology for the exchange
of data (e.g., virtual private networks (VPNs) and/or File Transfer Protocol (FTP) sites, as well
as the implementation of the SDMX standard); and (iii) oversee data security through use of
appropriate control mechanisms (e.g., defined submitters, reception and connectivity testing,
setting dates and times of delivery, verification of data transfer, etc.);
55
(f) Establishment of informal arrangements. Regardless of the formal framework for
collaboration, it is good practice for the involved agencies to establish regular communication
between their staff to address technical issues that might emerge on a daily basis, such as the
verification of the source information, the clarification of the metadata and the possible impact
on data compilation of various regulatory changes, among others. This communication does not
replace meetings involving all agencies for joint decisions on the work programme;
(g) Organization of staff cross- training. For example, the interpretation of customs records
by statisticians working for the national statistical office or central bank is facilitated when
statisticians have knowledge of the customs operation in situ. It is good practice to arrange for
visits of the statisticians to the customs ports in order to allow them to better understand the
procedures for different types of customs declarations and the limitations of the data. It is also
important that customs administrations, with the help of statistical offices and central banks,
organize training of their staff on the applicable statistical requirements and the importance of
customs records for the compilation of high-quality trade statistics;
(h) Conduct of outreach activities. In order to ensure that the compiled data meet user
demand and to secure user support, it is good practice to conduct periodic meetings with various
user groups to make them aware of what data are available and how to use the data effectively,
as well as to collect information on their needs to be included in planning further improvements
in data compilation and dissemination. It is good practice also to invite to the meetings of the
coordination committee, as necessary, other institutions and agencies (public, private and/or
academic) with the aim of ensuring their potential contribution to the statistical process. For
example, there can be meetings with various business associations to explain the importance of
the accurate completion of the relevant customs documents and survey forms. Regular meetings
with other government agencies, which are important users of the trade statistics, as well as with
the compilers of national accounts and balance-of-payments statistics, are equally important, as
these will help to achieve a better overall quality of national statistics.
E. Institutional arrangements and data quality
5.22. The effectiveness of institutional arrangements is ultimately judged by the quality of the
disseminated trade statistics. Properly functioning institutional arrangements can significantly
contribute to the enhancement of data quality.
5.23. As described in chapter IX of IMTS 2010, the dimensions of data quality include
prerequisites of quality, relevance, credibility, accuracy, timeliness, methodological soundness,
coherence and accessibility. Achieving quality improvements is a complex and time-consuming
task. The development and implementation of an effective data quality assurance programme
would usually require the cooperation of all involved agencies. Therefore, appropriate
institutional arrangements are important in allowing and fostering such cooperation and should
clearly identify the roles of each agency in such a programme.
56
Box V.3
Experience of Brazil in the division of work on trade data quality
In Brazil, there is a clear division of labour on foreign trade data quality assurance. The agency
responsible for the quality of the export data is the Secretariat of Foreign Trade (SECEX) of the
Ministry of Development, Industry and Foreign Trade (MDIC), while the agency responsible for
the quality of import data is the Federal Revenue Service of Brazil (Customs) of the Ministry of
Finance.
Export data quality is guaranteed by the validation system of SECEX/MDIC, as described in
Annex IX.A of this Manual, while the quality of import data is guaranteed by the application of
the Customs Valuation Agreement of the World Trade Organization (WTO) and by application
of the parameterized customs system on the physical and documents supervision.
Box V.4
Responsibilities for quality assurance: experience of Canada
In the experience of Canada, there are a number of players involved in the quality assurance of
merchandise trade data:
(a) Canada Border Services Agency (CBSA), which is the supplier of the administrative data for
imports, performs basic validity editing to ensure that valid codes for all data elements are
transmitted to Statistics Canada. In addition, there is a CBSA amendment programme which is
used to correct errors detected by CBSA or the importer. All amendments are also transmitted to
CBSA. However, there are no CBSA validity checks or an amendment programme for exports,
although corrections from exporters are occasionally received;
(b) The International Trade Division of Statistics Canada performs a series of checks and
reasonability edits and imputations on import and export data. Further, High-value transactions
are routinely reviewed and corrected manually where necessary;
(c) Merchandise trade data are cross-checked against other data series for selected commodities
so as to ensure consistency. Examples of such commodities are energy products, aircraft and
agricultural products;
(d) Prior to dissemination, publically released information is presented to Statistics Canada
Senior Management to ensure reasonableness and for further comparison with other data series.
57
Box V.5
Cooperation between the National Statistical Institute of Italy (ISTAT) and the National
Customs Authority, in particular on data quality
Institutional arrangements – establishment of a committee. The National Statistical Institute of
Italy (ISTAT), as responsible agency, has established and maintained long-lasting institutional
cooperation with the National Customs Authority. From an operational point of view, a
dedicated committee, composed of members of each organization and chaired by ISTAT,
oversees all the technical, IT and methodological issues related to the successful data
transmission of customs data. In addition, the Committee takes on board and examines any
issues related to changes in national regulations, EU-level regulations and customs procedures as
far as they may affect quality and timeliness in the production and dissemination of external
trade figures. The Committee then informs the relevant superior bodies if some action is required
in terms of changes in the national legislation or application procedures. In particular, ISTAT is
continuously informed by the Customs Authorities of any changes in customs data structure and
procedures.
Cooperation on data quality. The provision of high-quality customs data has always represented
a key issue in the institutional and technical cooperation between ISTAT and the National
Customs Authority. Up to now, the National Customs Authority has supported timeliness in data
transmission while performing only formal quality checks on customs and statistical variables.
On the other hand, ISTAT has developed a sound methodology for outlier detection and is
regularly engaged in data quality checks performed automatically or under the direct supervision
of trade experts at the product level. The National Customs Authority has recently expressed its
strong interest in cooperating with ISTAT in order to improve the quality of customs data for
statistical purposes, under the institutional umbrella of the National Statistical System. This
initiative, which implies stronger cooperation on technical and methodological grounds with full
respect for national confidentiality rules, was welcomed by ISTAT from both technical and cost-
efficiency perspectives. Given the sharp decline in human resources devoted to the foreign trade
statistics production process all over the world, such cooperation can be regarded as offering an
opportunity to devote the limited amount of available human resources to more value-added
quality checks by moving downward (to the level of the data collection and preliminary
validation process) more standardized inconsistency and data quality checks.
58
Annex V.A
Institutional arrangements and the Automated Export System (AES): experience of the
United States of America
5.A.1. Automated Export System of the United States of America. The Automated Export
System (AES) of the United States is the central point through which export shipment data
required by multiple Government agencies is filed electronically, using the efficiencies of
electronic data interchange. Export information is collected electronically from the export trade
community and edited immediately, with errors being detected and corrected at the time of filing.
The editing and validation processes of the AES reflect the requirements of various partnering
Government agencies to ensure complete, timely and accurate reporting of export information.
As the AES evolves, additional edits and validations are added to the system so as to
continuously improve the quality of export data submitted.
5.A.2. Entities that participate in the Automated Export System. The AES is a joint venture of
the Foreign Trade Division of the United States Census Bureau, the United States Customs and
Border Protection (CBP), the Department of Commerce (DOC), the Bureau of Industry and
Security (BIS), the Department of State, the Directorate of Defense Trade Controls (DDTC), the
Department of the Treasury, the Office of Foreign Assets Control (OFAC), the Department of
Energy (DOE), the Office of Arms Control and Non-Proliferation, the United States Nuclear
Regulatory Commission (NRC), and the export trade community. The AES mainframe resides
with the CBP.
5.A.3. In order to facilitate electronic filing of export information to the AES, the AESDirect
system was developed by the United States Census Bureau through an outside contractor.
AESDirect, which is an internet based system, became operational on 23 September 1999 at
www.aesdirect.gov. It eliminates the need for export filers to establish direct
telecommunications with CBP and provides an interactive interface through which filers submit
the required export information about their shipments. AESDirect also includes the edits and
validations incorporated in the AES, and evolves as new requirements are included in the AES.
Partnering Government agencies wanting to add additional edits and validations to the AES and
AESDirect system contact the Census Bureau and prepare the respective requirements, which are
then forwarded by the Census Bureau to the CBP AES Developers and the AESDirect contractor
for inclusion in the two systems.
5.A.4. The AES also serves as a conduit through which required export information reaches
appropriate Government agencies. The United States Census Bureau extracts AES data in order
to compile and publish export trade statistics, while AES validates dual-use shipments against
licences approved by the Bureau of Industry and Trade Security and forwards that information to
the agency. Similarly, the Directorate of Defense Controls utilizes the AES partnership agency
interface to validate outbound munitions shipments against previously approved licences and
transmits the data to the agency. Partnering agencies will continue to work in cooperation as the
AES goes through future phases.
59
Annex V.B.
Institutional arrangements for foreign trade statistics: experience of Mexico
5.B.1. Importance of the legal framework for the institutional arrangements. The legal
framework has been central to strengthening the institutional arrangements for the generation of
statistical information in Mexico. In 2006, a provision in the Constitution established a National
System of Statistical and Geographical Information (SNIEG), whose data is to be considered
official. The SNIEG Law of 2008 designated the National Institute of Statistics and Geography
(INEGI) as the independent coordinating entity of SNIEG. All of the Government agencies
involved in the collection, treatment, generation and dissemination of national statistical and
geographical information take part in the work of collegiate bodies of the SNIEG, called
specialized technical committees. These committees are responsible for the development or
revision of technical standards, and for the establishment of guidelines to define the conceptual
framework of the processes involved in each subject area.
5.B.2. The Specialized Technical Committee on Foreign Trade Statistics. For more than 20
years, the Working Group on Foreign Trade Statistics of Mexico, which includes the General
Customs Administration, the Central Bank (Banco de Mexico), the Ministry of Economy and
INEGI, has been responsible for defining criteria for the production and release of the
international merchandise trade statistics of Mexico. Initially, these institutions worked mainly
on the basis of official letters and meetings; however, changes in the law on Statistics now
provide the legal framework supporting the work of a Specialized Technical Committee on
Foreign Trade Statistics, which has assumed responsibility for conduct of the activities of the
initial Working Group.a The roles of the various institutions that participate in the Committee
are defined as follows:
(a) INEGI is responsible for the coordination of the group‘s activities and for the
dissemination of official data ensuring the implementation of international recommendations;
(b) The Central Bank México is responsible for the statistical processing of custom records
according to agreed criteria;
(c) The General Customs Administration provides the administrative records and their
characteristics;
(d) The Ministry of Economy provides information about foreign trade rules and the
nomenclature of imports and exports.
5.B.3. Work programme of the Committee. The Committee establishes a three-year work
programme and meets approximately once every quarter. The Committee agrees and follows up
on an agenda for the issues to be addressed by the Committee. The programme is focused on the
improvement of the procedures for the production of trade statistics and the analysis of users‘
needs (including those of balance-of-payments and national accounts statisticians). In addition to
face-to-face meetings, the Committee members communicate through teleconferencing to
address specific issues related to the daily process of the production of statistical results, such as
the analysis and clarification of source data.
a The agreement on the creation of the Specialized Technical Committee on Foreign Trade Statistics of Mexico and
the rules for the operation of this type of Committees are available from www.inegi.org.mx.
60
5.B.4. Main issues addressed by the Committee. The main issues covered in the work
programme are the periodic revision of customs records to enable a proper interpretation of the
declarations according to international recommendations, and the content of metadata to enable a
clear explanation of clearly the characteristics of the records and how they are processed to
produce the statistics on international merchandise trade. The Committee agrees on the release
calendar of preliminary and revised figures according to the current release policies.
5.B.5. Technical nature of the Committee. The success of the Committee is based on the
participation of knowledgeable representatives on behalf of their institutions. In all cases, the
participants are technical staff, as opposed to senior management staff; however, each participant
receives the support of the respective institution for reaching agreements. The main task of the
Committee is to provide timely answers to technical questions in respect of the production of
statistical results, taking into account the simplification of customs procedures.
61
Annex V.C.
Integrated Foreign Trade System of Brazil: institutional arrangements
5.C.1. Integrated Foreign Trade system (SISCOMEX) of Brazil. In Brazil, the coordination of
the work between the various agencies involved in foreign trade is based on the assumption that
each agency maintains its independence and the ownership of its information. Within this
framework, Brazil has developed a fully computerized system for the registration of exports and
imports, the Integrated Foreign Trade System (SISCOMEX), which records all foreign trade
transactions of the country and involves all the entities that participate in foreign trade, including
governing and consenting agencies.
5.C.2. Governing agencies. Governing agencies are those responsible for definitions, and
include: the Customs of Brazil (Ministry of Finance, Federal Revenue Secretary), responsible for
the tributary and tax police; the Central Bank of Brazil, responsible for the contracting exchange;
and the Secretariat of Foreign Trade, responsible for the commercial operations of export and
import (standard rules, trade remedies, trade promotion and statistics).
5.C.3. Consenting agencies. The consenting agencies are entities involved in foreign trade (30
in total) which are responsible for inspections and special permits, such as certification of origin,
phytosanitary issues, controlled products, military products, etc. The Ministry of Agriculture, the
Ministry of Health, the environmental control agencies (IBAMA), the quality control agency
(INMETRO), the Ministry of Defence and the Ministry of Justice are the main consenting
bodies.
5.C.4. Institutional arrangements in respect of Brazil’s foreign trade statistics. In 1991,
pursuant to a determination by the Presidency of Brazil, approved as law in the Congress, a
technical and political accord was reached among the agencies involved. Based on this
determination, a decision-making structure for foreign trade statistics was created, which
consisted of a Managers Committee (composed of the ministers of the three Government
agencies mentioned in para. 5.C.2 above), a Technical Committee (comprising technicians with
extensive knowledge of foreign trade activities) and a set of subcommittees (made up of experts
in each area and each body responsible for standards and rules), with each body clearly defined
functions. This decision-making structure is also responsible for training users (both companies
and individuals) and for infrastructure.
5.C.5. Working arrangements. Decisions are taken by each subcommittee and when there is no
agreement, the matter is referred to the Technical Committee or, if necessary, to a higher level,
that of the Managers Committee (Ministers) for a final decision. All three governing bodies have
full access to the system within their area of responsibility, without need of approval by the
others. All access and permissions have been previously negotiated within the technical
subcommittee and the Technical Committee. Simple questions such as on responsibility for the
administration of tables of code and names and the implementation of data checks in the data
entry system (e.g., regarding parameters for preventive validation) were also previously defined
for each body. These arrangements have allowed a single data source and a single flow of
information to exist, with prior validation of all the variables and interconnection with other
62
existing databases (e.g. the national register of companies with foreign trade data), as well as the
implementation of the recommendations of IMTS.
63
Annex V.D.
Inter-Agency Committee (IAC) on Trade in Goods of the Philippines: institutional
arrangements
5.D.1. Philippines Inter-Agency Committee (IAC) on Trade in Goods. The Philippines has
established an Inter-Agency Committee on Trade in Goods whose members belong to the
following key agencies of the Government: the National Statistical Coordination Board (NSCB),
the National Statistics Office, the National Economic and Development Authority, the Central
Bank (Bangko Sentral ng Pilipinas), the Department of Trade and Industry, the Bureau of
Customs and the Philippine Economic Zone Authority. There are two technical working groups
under the Inter-Agency Committee, namely, the Technical Working Group on Trade in Goods
and the Technical Working Group on Trade in Services. The Technical Working Group on
Trade in Goods is tasked:
(a) To serve as a forum for the discussion of the issues raised by the stakeholders regarding
the official statistics on trade in goods and services;
(b) To conduct an in-depth review of all issues relating to Philippine trade statistics,
including foreign and domestic trade on goods and services;
(c) To conduct an in-depth assessment of available data on export of IT services and analyse
possible improvements in data reporting, collection and consolidation;
(d) To review the concepts, techniques, and methodologies used in the collection, processing
and reporting of trade statistics to ensure conformity with prescribed statistical standards;
(e) To recommend policies geared towards improved generation of trade statistics on goods
and services;
(f) To conduct an in-depth review of export statistics and valuation practices of exporting
companies and to identify important issues;
(g) To conduct an in-depth review of consigned imports;
(h) To present the results and recommendations to the NSCB Executive Board for
appropriate action.
64
Annex V.E.
Experience of China: customs as the responsible agency
5.E.1. The General Administration of Customs of China (GACC) is the responsible agency for
the compilation of international merchandise trade statistics. In China, customs is responsible for
the collection, processing, compilation and dissemination of China‘s external merchandise trade
statistics according to the customs law, the statistics law, and the regulation on customs statistics
of China. The Statistical Department in the General Administration of Customs of China is
responsible for the formulation of the methodology in accordance with the international
standards that have been adopted, the organization of nationwide trade statistical operations, the
development and implementation of data compilation arrangements, and the dissemination and
analysis of merchandise trade statistics. For each of the 41 customs districts throughout China, a
statistical office has been established which is responsible for the collection, verification,
processing and transmission of its regional trade data to the General Administration of Customs
of China.
5.E.2. Customs Automation Entry System. The customs declaration is the exclusive source of
data for international merchandise trade statistics. The declarations are made through the
Customs Automation Entry System and are examined by customs officers. The data records for
compiling trade statistics are extracted and verified by the statistician in relevant customs
districts, and then transmitted online from all customs districts to the computer centre of the
General Administration of Customs on a monthly basis. The General Administration of Customs
publishes data on a monthly basis, through media, online and through regular publications.
5.E.3. Cooperation between the General Administration of Customs and other agencies. An
institutional cooperation mechanism has been set up between the General Administration of
Customs and other agencies to respond to users‘ requirement in order to improve the quality of
statistics. Memorandum of understanding and agreements on statistical information services have
been established between the General Administration of Customs and the National Bureau of
Statistics, the Central Bank, the Ministry of Commerce and the State Administration of Foreign
Exchange, among other bodies, for the compilation of other economic statistics according to
SNA/BOP requirements, or for the purpose of trade administration and analysis.
65
Chapter VI
Statistical territory and organization of data collection
6.1. Introduction. The present chapter is based on chapter II of IMTS 2010, entitled ―Trade
system‖. It provides additional information on the definition of statistical territory and its
territorial elements. It describes challenges and good practices in the organization of data
collection with respect to those elements and in relationship to the general and special trade
systems, taking into account the data sources described in chapters II to IV of this Manual,
country practices in establishing the legal framework (chap. I) and institutional arrangements
(chap. V).
A. Statistical territory
6.2. Definition. IMTS 2010 (para. 2.1) defines the statistical territory of a country as ―the
territory with respect to which trade data are being compiled‖, noting that the definition of the
statistical territory adopted by any given country may or may not coincide with its economic
territory, depending on the availability of data sources and other considerations. IMTS 2010
recommends that countries provide a detailed description of their statistical territory and make
that description publicly available as a part of their metadata to ensure an unambiguous
identification of the flows of goods recorded in their trade statistics.
6.3. Elements and parts of the statistical territory. It is good practice to define the statistical
territory by listing the various elements and territorial parts of its economic territory that belong
to it. IMTS 2010 (para. 2.3) recommends that the descriptions of these territorial elements, when
applicable, be based on the definitions of the customs terms as contained in the annexes to the
revised Kyoto Convention (RKC).35
It is also good practice to use the definitions provided in
other relevant international conventions, such as the 1982 United Nations Convention on the
Law of the Sea.36
6.4. In countries where data collection is based on customs records, the main element of the
statistical territory is usually the free circulation area. IMTS 2010 (para. 2.3) identifies the
following additional territorial elements and recommends that countries make clear whether or
not they exist in the country, and whether or not they are included in its statistical territory:
islands; territorial waters; continental shelf; offshore and outer space installations and apparatus;
commercial and industrial free zones; customs warehouses; premises for inward processing;
territorial enclaves and exclaves, and overseas territories. Some elements of the statistical
territory should not be viewed as defined exclusively in terms of specific geographical location,
as they also can be defined on the enterprise level in terms of the specific operations that may be
carried out (e.g., inward processing, customs warehousing, etc.).
35 See chap. II for an introduction to the RKC.
36 United Nations, Treaty Series, vol. 1833, No. 31363.
66
B. Detailed description of the elements of the statistical territory
6.5. Free circulation area. The concept of free circulation area is used by the RKC in the
context of the definition of ―clearance for home use‖. ―Clearance for home use‖ is defined as
―the Customs procedure which provides that imported goods enter into free circulation in the
Customs territory upon the payment of any import duties and taxes chargeable and the
accomplishment of all the necessary Customs formalities‖.37
Goods in free circulation may be
disposed of without Customs restriction.38
6.6. Islands. Islands are generally defined as any piece of subcontinental land that is
surrounded by water. Very small islands such as emergent land features on atolls can be called
islets, cays or keys. A grouping of geographically or geologically related islands is called an
archipelago. Continental islands are bodies of land that lie on the continental shelf of a continent.
Oceanic islands are islands that do not sit on continental shelves. An island can be also a land
surrounded by water in a river or lake.
6.7. Territorial waters. In general, the term ―territorial waters‖ is understood to have the same
meaning as the term ―territorial sea‖ which is used in the 1982 United Nations Convention on the
Law of the Sea.39
This term refers to the water area over which the sovereignty of a coastal state
extends and is internationally recognized (see box VI.1 for details). However, in the statistical
practice of some countries the term ―territorial waters‖ may be used in a different or broader
sense. It is advisable for countries to use terminology and definitions provided by the Convention
as much as possible when referring to different territorial elements of their country that are
relevant for their trade statistics and provide the detailed national definition of those elements in
their trade statistics metadata. Further, it is good practice for countries to make clear whether a
zone contiguous to its territorial sea, such as an exclusive economic zone, the continental shelf or
any parts thereof, are included in its statistical territory (see box VI.1 for the definition of these
terms). It is further advised that trade statistics compilers consult on this matter with appropriate
legal authorities of their country, as well as with the SNA and BOP compilers, for necessary
details and clarifications.
Box VI.1
Excerpts from the United Nations Convention on the Law of the Sea a
Territorial sea
―The sovereignty of a coastal State extends, beyond its land territory and internal waters and, in
the case of an archipelagic State, its archipelagic waters, to an adjacent belt of sea, described as
the territorial sea‖ (article 2 (1)). ―Every State has the right to establish the breadth of its
territorial sea up to a limit not exceeding 12 nautical miles, measured from baselines determined
in accordance with this Convention‖ (article 3).
37
See RKC, Specific Annex B, chap. 1, E1/F2.
38 See chap. II for information on the customs procedures defined in the RKC.
39 The relevant part of the Convention in this regard is available from http://www.un.org/Depts/los/
convention_agreements/texts/unclos/part2.htm.
67
Contiguous zone
―1. In a zone contiguous to its territorial sea, described as the contiguous zone, the coastal State
may exercise the control necessary to: (a) prevent infringement of its customs, fiscal,
immigration or sanitary laws and regulations within its territory or territorial sea; (b) punish
infringement of the above laws and regulations committed within its territory or territorial sea‖
(article 33 (1)) ―2. The contiguous zone may not extend beyond 24 nautical miles from the
baselines from which the breadth of the territorial sea is measured‖ (article 33 (2)).
Exclusive economic zone
The exclusive economic zone is an area beyond and adjacent to the territorial sea. ―In the
exclusive economic zone, the coastal State has: (a) sovereign rights for the purpose of exploring
and exploiting, conserving and managing the natural resources, whether living or non-living, of
the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other
activities for the economic exploitation and exploration of the zone, such as the production of
energy from the water, currents and winds; (b) jurisdiction as provided for in the relevant
provisions of this Convention with regard to: (i) the establishment and use of artificial islands,
installations and structures; (ii) marine scientific research; (iii) the protection and preservation of
the marine environment; (c) other rights and duties provided for in this Convention‖ (article
56(1)). ‖Breadth of the exclusive economic zone: The exclusive economic zone shall not extend
beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is
measured‖ (Article 57).
Continental shelf ―The continental shelf of a coastal State comprises the seabed and subsoil of the submarine areas
that extend beyond its territorial sea throughout the natural prolongation of its land territory to
the outer edge of the continental margin, or to a distance of 200 nautical miles from the baselines
from which the breadth of the territorial sea is measured where the outer edge of the continental
margin does not extend up to that distance‖ (article 76 (1)). ―The coastal State exercises over the
continental shelf sovereign rights for the purpose of exploring it and exploiting its natural
resources‖ (article 77 (1)) ―The rights referred to in paragraph 1 are exclusive in the sense that if
the coastal State does not explore the continental shelf or exploit its natural resources, no one
may undertake these activities without the express consent of the coastal State‖ (article 77 (2)).
a The full text of the Convention is available at http://www.un.org/depts/los/convention_agreements/texts/unclos/
unclos_e.pdf
Box VI.2
European Union practices concerning specific territorial elements
According to European Union legislation, exclusive economic zones are not part of statistical
territory because they are not part of the customs territory of a member State. Customs
regulations provide that the customs territory of the Community shall comprise the listed
member States‘ territories, ―including their territorial waters, internal waters and airspace‖(see
Regulations (EC) No.450/2008 of the European Parliament and of the Council of 23 April 2008
laying down the Community Customs Code (Modernized Customs Code), title 1, chapter 1,
article 3, para. 1).
However the exclusive economic zones are treated for the purpose of specific movements,
namely offshore installation, as if they were part of statistical territory, since the member States
have ―sovereign rights for the purpose of exploring and exploiting, conserving and managing the
68
natural resources, whether living or non-living, of the waters superjacent to the seabed and of the
seabed and its subsoil, and with regard to other activities for the economic exploitation and
exploration of the zone, such as the production of energy from the water, currents and winds‖
(United Nations Convention on the Law of the Sea, article 56 (1) (a)).
The European Union legislation does not, however, cover the cases where an offshore
installation is located outside of the exclusive economic zone, stationary on the continental shelf
or even outside the shelf.
The continental shelf can spread out beyond the exclusive economic zone of a country
depending on the seabed topography.
Since ―The coastal State shall have the exclusive right to authorize and regulate drilling on the
continental shelf for all purposes‖ (article 81 of the United Nations Convention on the Law of the
Sea), use of the same approach might be recommended for the continental shelf as for the
exclusive economic zone.
If the installation is stationed beyond the continental shelf, there is no country that has the
exclusive right, neither to exploit nor to authorize the drilling in this area. Recommendations
contained in IMTS 2010 utilizes the residency of the (economic) owner and the country's
jurisdiction to define statistical territory: ―any installation or apparatus, mobile or not, located
outside of the geographical territory of a country, owned by the country resident(s) and
remaining under the country‘s jurisdiction, is treated as if it were a part of its economic territory‖
(para. 1.7).
6.8. Offshore and outer space installations and apparatus. Offshore installations in the IMTS
2010 context refer to any installation or apparatus, mobile or not, located outside the
geographical territory of a country, under economic ownership of the country‘s resident(s) and
remaining under the country‘s jurisdiction. Examples are drilling rigs in international waters for
the purposes of oil and gas production. However, if the offshore installation operates in the
economic territory of another country for more than one year and is treated as the resident unit of
that country in accordance with the System of National Accounts 2008 (2008 SNA),40
then that
installation belongs to the economic and statistical territory of that other country (if that country
applies the general trade system). However, if an installation periodically moves in and out of
that economic territory, it can be treated in the same way as ships and seen as a part of the
statistical territory of the country where the economic owner resides. In all such cases, it is
advisable for the countries concerned to agree on a common treatment of such installations that
is both operational and practical.41
6.9. Outer space installations and apparatus. These are objects launched into outer space by
countries and are subject to international law. Outer space is conventionally defined as space
located at an altitude of 100 kilometres above sea level. The framework for international space
law was established by the Outer Space Treaty, which was commended by the General Assembly
of United Nations and in its resolutions 2222 (XXI) of 19 December 1966 entered into force in
40
United Nations publication, Sales No. E.08.XVII.29.
41 Offshoring understood as the movement of a business process to another country has per se no relationship with
Offshore and outer space installations and apparatus.
69
1967.42
However, ―Outer space, including the Moon and other celestial bodies, is not subject to
national appropriation by claim of sovereignty, by means of use or occupation, or by any other
means‖(article II). For the purposes of trade statistics, the launched space object is treated as
belonging to the statistical territory of the country of residency of the economic owner,
irrespective which of country carried out the launch.
6.10. Commercial free zones. The term ―free zone‖ (or ―customs free zone‖) means a part of
the territory of a State where any goods introduced are generally regarded, insofar as import
duties and taxes are concerned, as being outside the customs territory. 43
Referring to two kinds
of authorized operations specified in the RKC, a distinction may be made between commercial
and industrial free zones.44
For IMTS purposes, a commercial free zone is a zone where goods, if
admitted, ―shall be allowed to undergo operations necessary for their preservation and usual
forms of handling to improve their packaging or marketable quality or to prepare them for
shipment, such as breaking bulk, grouping of packages, sorting and grading, and repacking‖.45
6.11. Industrial free zones. If the competent authorities allow processing or manufacturing
operations in a free zone and specify the processing or manufacturing operations to which goods
may be subjected in general terms and/or in detail in a regulation applicable throughout the free
zone, or in the authority granted to the enterprise carrying out these operations, such a zone is
referred to as an industrial free zone. 46
6.12. Various forms of free zones. It should be noted that customs free zones exist, inter alia, in
such forms as investment promotion zones, export processing zones, foreign trade zones,
commercial free zones and industrial free zones. In some cases, these zones are not delineated
geographically but may involve only a different tax, subsidy or customs treatment of certain
operations carried out by enterprises. A large and growing number of customs free zones are
onshore manufacturing enclaves which have been created to attract foreign direct investment
(FDI), stimulate local industry and provide employment to the local labour force. The legal
status of these zones ranges from extraterritorial, whereby they are exempt from all customs
laws, to one entailing varying degrees of customs control.
42
The Outer Space Treaty (formally the Treaty on Principles Governing the Activities of States in the Exploration
and Use of Outer Space, including the Moon and Other Celestial Bodies,) forms the basis of international space law.
The treaty entered into force on 10 October 1967. See United Nations, Treaty Series, vol. 610, No.8843.
43 See the RKC, Specific Annex D, Chapter 2, E1/F1.
44 IMTS 2010 retains the terms ―commercial free zone‖ and ―industrial free zone‖ which were used in the original
Kyoto Convention and which continue (as well as similar terms) to be applied in the commercial and legal practice
of many countries. The RKC retains only the description of the allowed operations without referring to the zones
where they might be used.
45 RKC, Specific Annex D, Chapter 2, para. 11.
46 Ibid, para. 12.
70
Box VI.3
The export processing zone: An example from Brazil
Brazil has adopted the concept of ―export processing zone‖ (EPZ) as defined by the World
Bank.a According to this definition, export processing zones cover various types of zones, e.g.,
free trade zones, duty-free zones, free-investment zones and offshore zones reflecting the various
types of activities being performed therein. Those activities include bonded warehousing, export
processing, assembling, trade through borders or by sea and financial services. EPZs are defined
as ―fenced-in industrial estates specializing in manufacturing for exports and offering their
resident firms free-trade conditions and a liberal regulatory environment. They are territorial or
economic enclaves in which goods may be imported and manufactured and reshipped with a
reduction in duties and minimal intervention by customs officials.‖
In Brazil, the Executive Branch is authorized to create, according with Law 11.508/2007, article
1º, EPZs in less developed regions, aimed at reducing regional imbalances, strengthening the
balance of payments, fostering technological transfer and improving the nation‘s economic and
social development. EPZs are characterized as free-trade areas for the establishment of
companies focused on production of goods to be exported.
a World Bank, ―Export processing zones‖, Policy and Research Series Paper 20 (Washington, D.C., 1992).
6.13. Customs warehouses. A customs warehouse is a designated place where goods can be
stored under the ―customs warehousing procedure‖.47
Usually, these goods are imported goods
which are brought into the country under that procedure and are stored under customs control
without payment of import duties and taxes. However, in some cases, domestic goods intended
for export can be stored in such warehouses as well.48
Warehoused goods can undergo usual
forms of handling to improve their packaging or marketable quality or to prepare them for
shipment, such as breaking bulk, grouping of packages, sorting and grading and repacking. They
can provide specialized storage services such as deep freeze or bulk liquid storage. However,
operations that may change the essential character of the goods are not normally allowed. After
allowed operations have been performed, and within the warehousing period, the goods may be
exported without the payment of duties, or they may be withdrawn for consumption upon
payment of duties at the rate applicable to the goods in their manipulated condition at the time of
withdrawal.
6.14. Premises for inward processing. Inward processing is defined by the RKC as ―the
Customs procedure under which certain goods can be brought into a Customs territory
conditionally relieved from payment of import duties and taxes, on the basis that such goods are
intended for manufacturing, processing or repair and subsequent exportation.‖49
It should be
noted that inward processing shall not be limited to goods imported directly from abroad, but
shall also be granted for goods already placed under another customs procedure. The Convention
47
See the RKC, Specific Annex D, Chapter 1/ E1.
48 For example, according to customs regulation in China, a ―customs warehouse for export goods‖ is a specific
customs warehouse for storage of domestic goods intended for exportation when the customs procedure for
exportation is completed.
49 See the RKC, Special Annex F, Chapter 1, E3./F2.
71
does not require that inward processing be carried out in premises or areas especially approved
by customs. Such processing can be carried out in any suitable premises provided that other
conditions for inward processing are complied with. Therefore, this element of the statistical
territory should be defined not only in terms of geographical location, but also functionally, at
the enterprise level, as applicable. However, country customs practices may differ and certain
inward processing might be limited to specific locations.50
6.15. Territorial enclaves and exclaves. For the purposes of IMTS 2010, enclaves are defined
as clearly demarcated land areas (such as embassies, consulates, military bases, scientific
stations, information or immigration offices, aid agencies, central bank representative offices
with diplomatic immunity, etc.) physically located in other territories and used by Governments
that own or rent them for diplomatic, military, scientific or other purposes with the formal
agreement of Governments of the territories where the land areas are physically located. An
enclave of a given country is an exclave from the perspective of the country where that enclave
is located. In certain cases, movements of goods between the host country and enclaves of other
countries located on its territory might be significant. All such movements are out of scope of
international merchandise trade statistics (see IMTS 2010, para. 1.49 (c)).
6.16. Overseas territories. Some countries exercise political and administrative control over
certain territories outside of their own national boundary. Such territories might be considered
separate statistical territories or part of the statistical territory of the mainland country.51
6.17. Special case: duty-free shops. In many countries, travellers are allowed to buy certain
goods such a cigarettes, alcohol, jewellery, etc., at certain locations at airports, on ships and
aircraft or at borders, etc., without payment of duties and/or with a refund of all applicable taxes.
Duty-free shops at airports and borders are part of the economic territory of a country. The same
applies to aircraft and ships if the economic owner is a resident of the country. Following the
applicable recommendations of IMTS 2010 on scope of trade statistics, goods acquired from
abroad for sale at duty-free shops should be included in imports. The statistical treatment of
goods sold at such shops is more complicated, as they may be sold to both residents and non-
residents and for use in the compiling country as well as in other countries. Trade compilers are
advised to cooperate with the BOP and SNA compilers with a view to adopting a consistent
statistical treatment of goods sold at such shops.
C. Organization of data collection with respect to different territorial elements
6.18. Data sources. The organization of data collection with respect to different territorial
elements requires a careful selection of the most appropriate data sources and depends on
50
In China, such processing can be carried out either in the specific customs control areas, such as export processing
zones, or outside of such areas, in processing factories or other premises approved by customs.
51 For example, French overseas departments and territories (Guadeloupe, Martinique, French Guiana, Réunion) are
treated as part of the French statistical territory while most British overseas territories are treated as separate
statistical territories (e.g., Anguilla, Bermuda, Cayman Islands, Montserrat, etc.). For details, see Statistical
Territories of the World for Use in International Merchandise Trade Statistics, Studies in Methods, Series M, No.
30 Rev. 3 (United Nations publication, Sales No. E.01.XVII.8). Available from http://unstats.un.org/unsd/trade/
stat_terr_e.pdf.
72
national circumstances and priorities. Table VI.1 presents an overview of the main data sources
and approaches to the organization of data collection under the general and special trade systems.
It should be reiterated that IMTS 2010 (para.2.20) recommends that countries apply the general
trade system, as general imports provide the most comprehensive record of the goods entering
the economic territory of a compiling country and increasing the stock of its material resources,
while general exports provide the most comprehensive record of the goods leaving its territory
and thus decreasing that stock. However, many countries continue to apply the special system for
both imports and exports (or may even apply one system for imports and the other for exports).
Details on the specific data sources and on the organization of data collection are provided
throughout this Manual but, in particular, in chapters I to V and VII.
6.19. Moving to the general trade system. Owing to the lack of territorial coverage and the lack
of uniformity in the application of the special trade system, countries using this system are
encouraged to develop plans to introduce the general trade system, under which the statistical
territory coincides with the economic territory (IMTS 2010, para. 2.28). When regular customs
records are not available for certain territorial elements of the economic territory, additional data
sources may be required (see table VI.1). Such sources could be surveys of free zone operators or
enterprise surveys (see chaps. III and IV for details on non-customs sources). However, such
surveys are, in general, costly and put a significant burden on respondents. Therefore, preference
should be given to the use of administrative records of customs or other entities that monitor the
trade related to these specific zones for security and other reasons. However, this information
may not be of sufficient quality or it might be difficult to merge or reconcile that information
with the trade data that are obtained from customs declarations (see chap. VII for further
information on the compilation of international merchandise trade statistics from different
sources). However, it is good practice for countries that follow the special trade system to
explore the possibility of including in the statistical territory, territorial elements that are
currently not included, if the trade related to these territorial elements is significant.
Table VI.1
An overview of data sources and the organization of data collection
Elements of
statistical territory
Data sources and the organization of data
collection
Trade system
Free circulation area Customs records and non-customs data
sources, e.g., enterprise surveys, in cases
when customs records are not sufficient or
are absent
General and special
Islands When islands are part of the free circulation
area: customs records and non-customs data
sources, e.g., enterprise surveys, in cases
when customs records are not sufficient or
are absent; see also the entry for overseas
territories below.
General and special
73
Territorial waters Customs records and enterprise surveys in
cases when customs records are not
sufficient or are absent; enterprise surveys
might be especially relevant for the
collection of data on trade in fish catch and
products extracted from the seabed (e.g., oil,
gas and minerals)
General and special
Exclusive economic
zones and continental
shelf
Non-customs sources such as records of the
appropriate regulatory bodies and enterprise
surveys; enterprise surveys might be
especially relevant for the collection of data
on trade in fish catch and products extracted
from the seabed (e.g., oil, gas and minerals);
customs records whenever available
General (and special,
depending on national
definition)
Offshore and outer
space installations
and apparatus
Non-customs sources such as records of the
appropriate regulatory bodies and enterprise
surveys; enterprise surveys might be
especially relevant for the collection of data
on products extracted from the seabed (e.g.,
oil, gas and minerals); customs records
whenever available
General (and special
depending on national
definition)
Commercial free
zones
Mainly non-customs data source, e.g.,
records of governmental bodies overseeing
operations in such zones and enterprise
surveys; customs records, whenever
available
General
Industrial free zones Customs records whenever available and
non-customs data source, e.g., records of
governmental bodies overseeing operations
in such zones and enterprise surveys
General and special
Customs warehouses Customs records General
Premises for inward
processing
Customs records supplemented by
enterprise surveys if customs records do not
provide all statistically important
information
General and special
Territorial enclaves
and exclaves
Trade involving enclaves and exclaves and
the host country are not in scope of IMTS,a
but IMTS compilers should assist compilers
of trade in services and BOP, whenever
possible
Overseas territories Records of local customs authorities and
non-customs data sources available to the
bodies responsible for the administration of
such territories
General and special
74
Duty-free shops Customs records and non-customs data
sources, e.g., records of the tax
administration, surveys of duty-free shop
operators
General and special
a See IMTS 2010, para. 1.49 (c). However, trade between a country‘s enclaves and countries different from the host
country are to be included under the general and special trade systems (assuming that these enclaves are considered
part of the elements included under the special system) if such trade is of significant scale, as determined by the
compiling country‘s statistical authority.
75
Chapter VII
Integration of data from different sources
7.1. Introduction. The present chapter builds on the discussion of the different data sources
contained in IMTS 2010, chapter VIII, on data compilation strategies, and in chapters II to IV of
this Manual. It describes challenges and good practices in the merging of customs and non-
customs data, as well as of different pieces of information from the same source thereby linking
the discussion on data sources (and the legal framework) as contained in part one of this Manual,
with the discussion of data compilation as contained in part two. The scope of this chapter is
limited to the compilation of international merchandise trade statistics. Its content is related to,
but clearly different from that of chapter XI, which deals with the integration of trade and
business statistics, aimed at generating additional and better information as well as efficiency
gains in the compilation of economic statistics.
7.2. IMTS 2010 recommendations. IMTS 2010 recommends the use of customs records as the
main and normally preferred data source, but recognizes that full coverage cannot be achieved
through the use of custom records only, either because the relevant transactions are not or are no
longer subject to customs controls or surveillance, or because record-keeping may not be
adequate from a statistical point of view. It is recommended that, in such cases, customs-based
data be supplemented with information obtained from other sources, as necessary, to ensure full
coverage of international merchandise trade statistics. Further, it is recommended that non-
customs sources be used as substitutes for available customs records only if they provide a cost-
effective means of improving the quality of trade statistics (IMTS 2010, paras. 8.2 and 8.9).
A. Advantages and limitations of customs and non-customs data sources
7.3. Reconciliation and integration of customs and non-customs data. The reconciliation and
integration of customs and non-customs data constitute a complex and time-consuming activity
which includes merging and cross-checking large amounts of collected data. Compilers need to
be aware of the conceptual and practical difficulties involved in reconciling and integrating data
from different sources, and users should be informed accordingly (IMTS 2010, para. 8.13).
7.4. Advantages and limitations of customs records. Both customs and non-customs sources
have their specific merits and shortcomings, of which compilers should be aware when deciding
which data sources to use. Customs records reflect the physical movement of goods across
borders, which international merchandise trade statistics aim to record, and are generally reliable,
detailed and readily available in most countries. However, they may not provide full coverage of
all transactions, or they may not be subject to adequate statistical quality control at customs or
made available to statistics compilers in a comprehensive and unrestricted manner (IMTS 2010,
paras. 8.2 and 8.12). Particular concerns regarding the use of customs data are related to the
possible undervaluation and misclassification of commodities for the purposes of tax evasion,
which may not, however, apply to all countries or may apply to varying degrees. Also, customs
records are not free from the reporting burden. In fact, the reporting burden of customs records is
high. However, it is imposed for customs purposes and not for statistical purposes.
76
7.5. Advantages and limitations of non-customs data sources. As described in chapter III, a
variety of non-customs data sources can be used by compilers to obtain information that would
otherwise not be available. Some of these additional data sources, such as surveys, can be used
very flexibly, while others, such as parcel and letter post records, provide only a predefined
information set. The use of non-customs data sources may increase the burden on data providers
and compilers. Also, these sources may suffer from a lack of a consistent classification (e.g., of
goods and countries), or from under-coverage (e.g., owing to the absence of an adequate survey
frame and non-response), or may not follow recommended standards for valuation, time of
recording and partner-country attribution. Trade statistics compilers should pay special attention
to these issues in order to obtain information from customs and non-customs sources that fulfils
the requirements of international merchandise trade statistics (IMTS 2010, para. 8.12).
7.6. Country practices in the use of additional data sources. Results of a survey in 2006
show (see table III.A.1) that, besides customs declarations, countries also use, to varying
degrees, postal records, tax records, currency exchange records, enterprise surveys, aircraft and
ship registers, foreign shipping manifests and reports of commodity boards as additional data
sources. All of these additional data sources can be useful or necessary in completing or
verifying the international merchandise trade statistics.
7.7. Data sources for special categories of goods. As transactions in certain categories of
goods may not appear in customs records, the compiling agency may have to use additional data
sources to achieve full coverage of the country‘s merchandise trade statistics. Relevant non-
customs data sources for the compilation of those categories of goods are described in chapters
III and IV. Those categories of goods include the following:
Goods delivered through postal or courier services
Electricity transmitted through fixed power lines
Petroleum, gas and water delivered through pipelines
Petroleum and gas produced outside the customs territory and shipped directly by vessel
Border trade (i.e., trade between residents of adjacent areas of bordering countries as
stipulated by national legislation)
Sales and purchases made by aircraft and ships in foreign ports
Sales and purchases of aircraft, ships and other mobile equipment
Transactions on the high seas
Military goods
7.8. Data sources for trade information regarding specific territorial elements. IMTS 2010
(see para 2.13 and chap. VI) recommends the implementation of the general trade system under
which the statistical territory covers all applicable territorial elements. For certain territorial
elements such as free zones, no or very limited information from customs declarations is
available, and compilers need to use either other administrative information collected by customs
(i.e., information required for security purposes) or non-customs data sources, in order to obtain
information on the trade transactions involving these areas. The compilation of trade data for
other territorial elements such as islands, territorial waters, etc., that are included in the statistical
territory also requires the use of non-customs data sources if customs records are insufficient or
absent (see chap. VI, table VI.1, for details).
77
B. Issues encountered when merging data from different sources
7.9. Integration of different data sources. To achieve full coverage of the international
merchandise trade statistics, data compilers often have to merge and cross-check data collected
from customs and non-customs sources, which is a highly complex and time-consuming activity.
Merging customs and non-customs data includes adding non-customs data to the customs data
and substituting non-customs data for the customs data. For the purpose of quality control and/or
for the information of the users, compilers might wish to differentiate data based on customs data
sources and data based on non-customs data sources.52
7.10. Issues encountered when merging data from different sources. Compilers should need to
be aware that the following issues need to be addressed when merging data from different
sources:
(a) Different sources may provide different data elements or levels of detail, e.g: parcel and
letter post records might not contain any commodity detail; cross-border surveys might provide
data only at the higher HS levels (e.g., that of HS chapters); and commodities that are difficult to
classify might be allocated to a few broad categories in non-customs sources, making it difficult
to merge them with the more detailed customs data (see the example of Uganda‘s Informal Cross
Border Trade Survey below);
(b) Some transactions might be subject to simplified reporting requirements at customs;
(c) There may be conceptual differences between sources: e.g., enterprise records might
contain the country of purchase and sale but not the country of origin or last known destination;
(d) There may be delays in data forwarding by some source agencies or these agencies may
use different release calendars, which may lead to unsynchronized provision of data;
(e) There may be a risk of double counting due to overlaps in the information provided by
different sources: e.g., between data on goods on consignment supplied by customs, and data on
sales of the same goods reported by the controlling governmental agency;
(f) It may be difficult to organize data processing in an efficient manner, since source
agencies may use different data submission media (hard copies, portable storage, electronic
transmission, e-mail, etc.) or incompatible computer data files (the integration of different
hardware and software systems is a problem in numerous cases);
(g) Data entry from certain sources (e.g., postal forms, passenger manifests) may involve the
use of a disproportionate amount of time and resources;
(h) There is a need to cross-check data from complementary sources (e.g., customs and
commodity boards) and to determine which sets are of greater reliability;
(i) Survey results that apply to a period longer than the reference period used for the
compilation of trade statistics cannot be easily added to the customs data;
(j) It is not always possible to identify partner countries in detail and some rest categories
will need to be used at times;
52
For example, in extra-EU trade statistics, member States are obliged to use statistical procedure 9 if the customs
declaration is not the source of information on imports or exports.
78
(k) The statistical value is made up of several components, some of which may not be
available in some cases;
(l) In enterprise surveys, quantity information is frequently not collected, or cannot be
provided at a level of sufficient detail.
C. Possible approaches and solutions when merging data from different sources
7.11. General considerations for the use of additional data sources. Compilers need to be
aware of the different sources that might be available to provide required information about
certain trade transactions that otherwise would not be available. Further, compilers need to gain a
thorough understanding of the contents and limitations and the quality of the additional data
sources, and obtain adequate access to these data sources. Appropriate institutional arrangements
between the compiling agency and the agency responsible for the additional data source need to
be in place (see chap. V for details).
7.12. Merging microlevel data from different sources. The following steps might be applicable
when merging microlevel data from different sources:
(a) Transform, to the best possible extent, the data from non-customs sources into a standard
format that can be readily handled by the IMTS compilation systems;
(b) Assess the data from non-customs sources, e.g., by comparing it with data from other
sources;
(c) Apply data editing operations, such as re-scaling or estimation of particular data items;
(d) Add new records to an existing data set or combine records from different sources,
including the elimination or correction of existing records, as needed, to avoid any double
counting;
(e) Validate and finalize the combined data set, including, e.g., imputation/estimation of
missing quantities.
7.13. Merging and reconciling data from different sources on the aggregate level. The
additional data sources might not provide sufficient detail to generate data records on the
microlevel or might provide only macrolevel information which could be used to establish
certain totals (i.e., for commodities or partners). In this case, so-called dummy records, which
would represent only a certain value without full commodity or partner detail, could be
generated. However, countries might encounter many different situations and might adopt
different practices.
79
7.14. Supportive measures. Country experience indicates that certain measures can be taken to
facilitate the merging of data from different sources. Compilers may consider:
(a) Establishing effective controls in the compiling agency to ensure timely replacement of
preliminary data from one source by final data obtained from another source (e.g., partner data
on a country-of-consignment basis received from customs may be replaced by data on a country-
of-last-known-destination basis (for the same goods) received from other governmental agencies,
if the latter are judged to be of better quality);
(b) Developing estimation and imputation procedures to deal with the missing data fields
(e.g., estimates of quantities for the current month can be based on current values and on the unit
value of the previous month);
(c) Conducting an ongoing campaign to sensitize customs officers and employees of other
source agencies regarding the importance of trade statistics for various purposes;
(d) Establishing a system-wide terminology-management strategy to ensure the use by all
agencies of a consistent terminology in questionnaires. Further, the same classifications for
commodities, partner countries, quantity units and modes of transport should be used;
(e) Running training programmes for staff involved in data compilation (both those of the
compiling agency and those of the source agencies, particularly on statistical standards and
requirements, conceptual standards and the use of appropriate software) in order to improve staff
skills in compiling and merging data from different sources;
(f) Conducting regular meetings between staff of compiling agencies and staff of source
organizations (including staff of large importing and exporting enterprises) to establish stable
and efficient working arrangements and complementing such meetings by periodic follow-up
phone calls and visits;
(g) Establishing, to the extent possible, a direct computer link with data suppliers to facilitate
data transmission and allow for better and faster verification of incoming data; and using
standard classifications and appropriate correlation tables to identify and link the various sets of
data;
(h) Coordinating the installation of computer hardware and software in the compiling and
source agencies to ensure their compatibility;
D. Examples of the merging of data from other administrative sources with customs data
7.15. Uganda: use of data of the commodity authority. In Uganda, the commodity authorities
submit monthly reports to the Uganda Bureau of Statistics (UBOS) for coffee, tea, tobacco and
cotton to complement customs data. The data provided contain variables like commodity name,
quantity, value, month, country of destination and, sometimes, the name of the company. The
customs data is then compared with the commodity authority‘s data to determine the accuracy
and reliability of the data for each commodity. Normally, the Uganda Bureau of Statistics adopts
the commodity authority‘s data which appear to be reliable and are based on actual flows
realized in a month. The data structure of the commodity authority‘s data is then aligned to the
customs structure, by coding the above variables and creating more relevant variables before data
merging. Merging is carried out once the structures of the two data sets are aligned.
80
7.16. Norway: use of ship registers. In Norway, the external trade of ships, aircrafts and
movable drilling rigs is not properly covered by data from customs. Statistics Norway regularly
receives information from Norway‘s shipping registers (NIS and NOR) about new registrations,
cancellations and other changes in the registers. Based on this information, a letter and a form are
sent to the registered owner, asking for additional information (see chap. III and annex XXIII.B
for details).
E. Examples of the merging of data from enterprise surveys with customs data
7.17. Uganda: Informal Cross Border Trade Survey. The Uganda Bureau of Statistics conducts
an Informal Cross Border Trade Survey on a monthly basis (see chap IV, box IV.1 for details).
The data are collected by trained enumerators under the supervision of the informal cross border
trade technical team at various border crossings around the country. The following data elements
are captured: customs station, item/commodity name, quantity, price, unit of measure, country of
origin/destination, mode of transport, date and day of the week. After processing the data, the
information is assigned to international and national codes for commodity, country, mode of
transport and border post among others. The Trade Survey data structure is aligned to the
customs structure before merging is carried out.
7.18. Challenges in commodity classification. In Uganda, a number of challenges are
encountered when transforming (coding) the cross-border data for incorporation into the HS.
Most of the commodity names cannot be easily traced in the HS system, thus making the
classification of commodities difficult. Moreover, various units of measure are assigned to the
same commodity, which requires harmonization before integration with data from other sources.
7.19. Turkey: Survey for the shuttle trade. The Statistics Institute of Turkey conducts a
quarterly survey for the shuttle trade at specific border crossings. As shown in figure IV.1, the
following data elements are captured: country of residency, country of citizenship, nights of stay
in Turkey, type of goods and value of those goods, type of payment, cost of packaging, loading
and shipping, countries of exports, and cost of private spending in Turkey. These data items are
combined with the customs records (see chap. IV, Box IV.2 for details)
7.20. Further examples. Chapters III and IV contain additional examples of the use of
non-customs data sources.
81
F. Integrated approach to economic statistics
7.21. Integrated approach to economic statistics. An integrated approach to economic statistics
calls for the use of common concepts, definitions, data-collection and estimation methods, and
data sources to produce consistent data across various statistical domains. The issues relevant to
the implementation of an integrated approach in trade statistics are discussed in chapter XI of the
Manual. In the context of this chapter, it should be stressed that in designing data collection (in
particular surveys), an important objective is to achieve consistency with statistics of the
different industries and sectors in order to allow and facilitate the merging and sharing of
information. Consistency between different surveys is facilitated by the use of a common
business register, statistical units and variables. For further information on the organization and
standardization of surveys, see chapter IV.
83
Chapter VIII
Data processing and database management
8.1. Introduction. The present chapter describes data processing and database management at
customs and at the statistical agency responsible for the overall compilation of international
merchandise trade statistics (the responsible agency). It describes the characteristics and
functions of these systems, giving the Automated System for Customs Data (ASYCUDA),
Eurotrace and national systems as examples. Further, it describes the data fields necessary for
statistical purposes and how to obtain these data from the customs records. This chapter logically
follows chapter VII which discusses the integration of data from different sources, and precedes
chapter IX, which discusses quality assurance, measurement and reporting.
A. Basic concepts
8.2. Statistical data processing and statistical information systems. As in other domains of
official statistics, the compilation of international merchandise trade statistics involves
collecting, processing, storing, retrieving, analysing and disseminating statistical data. In
practice, these processes are structured according to particular institutional arrangements in
countries and are mostly carried out with the help of information systems infrastructure
(including database management systems). The resulting organizational and information
systems architecture provides the framework within which different statistical compilation and
dissemination processes and subsystems play their respective roles and interact with one another.
While the architecture of a statistical data processing system will respond to the specific needs
and constraints faced by each country, there are various general frameworks available which
provide guidance and best practices, including the Generic Statistical Business Process Model
(GSBPM) proposed by the joint Economic Commission for Europe (ECE)/Eurostat /
Organization for Economic Cooperation and Development (OECD) work sessions on statistical
metadata (METIS).53
8.3. Database management systems. The basic functions of a statistical database management
system are to create, retrieve, update and delete (CRUD) specified data during the various stages
of the statistical data processing cycle. These operations are performed by the database
management system on data stored in a database according to a particular data model, such as the
relational data model, which is the de facto standard for a wide variety of database management
systems and database-related applications.54
The Structured Query Language (SQL) is a widely
accepted interface between relational database management systems and database-related
applications.
53
The Generic Statistical Business Process Model (GSBPM) provides standard terminology to describe and define
the set of business processes needed to produce official statistics. The model can also be used in harmonizing
statistical computing infrastructures, facilitating the sharing of software components, providing a framework for
process quality assessment and improvement, etc. Further details are available from http://www1.unece.org/stat/
platform/display/metis/METIS-wiki. See also United Nations Statistical Commission and Economic Commission
for Europe, ―Information systems architecture for national and international statistical offices: guidelines and
recommendations‖, Conference of European Statisticians Statistical Standards and Studies, No. 51 (Geneva, 1999).
Available from http://www.unece.org/fileadmin/DAM/stats/documents/information_systems_architecture/1.e.pdf.
54 Other models are the hierarchical model and the network model
84
B. Data processing and database management at customs
1. Requirements for automation at customs
8.4. Need for automation at customs. Customs administrations around the world are facing the
challenging tasks of simultaneously ensuring the protection of society fighting transnational
organized crime (enforcement), facilitating trade and collecting revenue, as well as providing
trade statistics.55
To support national customs administrations in increasing their efficiency and
effectiveness, the World Customs Organization (WCO) develops and provides standards and
guidelines (instruments) for the customs operations, many of which call for and deal with the
automation of procedures and processes. Customs administrations that are contracting parties are
obliged to comply with those standards.
8.5. Revised Kyoto Convention. The WCO Council adopted the revised Kyoto Convention
(RKC) in June 1999 as the blueprint for modern and efficient Customs procedures in the twenty-
first century. The General Annex of the RKC recommends that the following standards be
implemented by a modern customs administration: standard, simplified procedures, continuous
development and improvement of customs control techniques, maximum use of information
technology, and a partnership approach between customs and trade. Among the key elements
within the RKC to be applied by modern customs administrations is the maximum use of
automated systems. The revised Kyoto Convention entered into force on 3 February 2006.56
For
further information on the RKC, please see chapter II, section B.
8.6. Single window environment. The establishment of the single window environment for
border control procedures as recommended by United Nations Centre for Trade Facilitation and
Electronic Business (UN/CEFACT) is considered by customs administrations as the solution for
the complex problems of border automation and information management involving multiple
cross border regulatory agencies. ―Single window‖ means that trade related information and/or
documents need be submitted only once at a single entry point and that this information is shared
across governmental systems. An important element in the establishment of a single window is
the harmonization of data requirements and formats see (http://www.wcoomd.org/sw.htm).
55
The main instrument of WCO for facilitating the collection, comparison and analysis of statistics is the
International Convention on the Harmonized Commodity Description and Coding System, popularly known as the
Harmonized System or the HS, which provides for the systematic and uniform classification of goods. With 141
contracting parties (as of 1 December 2011), the HS Convention is one of the most successful instruments developed
by WCO, with its international goods nomenclature now being used by more than 200 countries, territories and
customs or economic unions as a basis for the collection of trade statistics. Under the HS Convention, contracting
parties are obliged to make their import and export trade statistics publicly available in conformity with the six-digit
HS codes or beyond that level if they wish, thereby promoting a predictable global trading system. WCO also
recommends that its member customs administrations, as well as contracting parties to the HS Convention, report
their import and export trade statistics to UNSD as the world‘s premier depositary for global statistics. (See WCO
recommendation concerning the reporting of trade data to UNSD (19 June 1997). Available from
www.wcoomd.org/home_hsoverviewboxes_tools_and_instruments_hsrecommendation.htm).
56 See ―Kyoto 2000: the International Convention on the Simplification and Harmonization of Customs Procedures
(Revised) - pathway to efficiency and effectiveness in the customs environment‖.
85
8.7. WCO Data Model. Governments and customs administrations realize that the increasing
demand for free and secure trade, in particular in an e-commerce environment, requires data
standardization in order for Governments to accomplish their missions. The WCO Data Model
provides a maximum framework of standard and harmonized sets of data and standard electronic
messages to be submitted by trade for customs and other regulatory purposes to accomplish
formalities for the arrival, departure, transit and clearance of goods in international cross-border
trade. Standardized data sets and electronic messages using international code standards are key
for effective and efficient exchange and sharing of information between businesses and
government. The Data Model has aligned export and import data requirements and created a
single electronic structure, which enables a more effective exchange of information between
export and import and allows export information to being reused at import. The WCO Data
Model also includes data requirements of other governmental regulatory authorities enabling a
single window environment, allowing the traders to submit information only once to a single
official body, preferably customs, to fulfil all regulatory requirements related to an import or and
export.57
8.8. Seamless integrated data pipeline. The above initiatives for automation at customs are
addressed to countries. However, the information-sharing and the information requirements need
to viewed and analysed not only from a national but also from an international perspective, as, by
definition, trade transactions extend over multiple countries. The agent or trader completing the
customs declaration might have only partial information about the underlying transaction,
logistics and earlier or subsequent transactions. This situation has a negative impact on the
quality of information provided by trade statistics, as, for example, users would prefer to obtain
partner information for exports in terms of final destination, rather than and not only in terms of
the last known destination which is what is frequently provided. Therefore, experts call for the
construction and establishment of a web-based, seamless, electronic data pipeline linking the
seller/consignor and the buyer/consignee and the interested economic operators in-between. This
is the goal of the European Union-funded Cassandra pilot project.58
Besides the technical
solution, an adequate international legal framework has to be established to ensure the accuracy
of the data. It is expected that statistics would gain from such an integrated data pipeline in terms
of quality, timeliness and availability of data. However, it has been pointed out that, this would
require trade statisticians to identify the real data requirements, become involved in customs
developments and pursue a combined data legislative framework for customs and statistics.59
2. Characteristics of data processing at customs
8.9. Characteristics of data processing at customs. The characteristics of data processing at
customs encompass the electronic submission of customs declarations (and/or provision of paper
declarations) and the provision of additional documentation at geographically dispersed locations
57
See ―WCO Data Model: cross-border transactions on the fast track‖ (2009). Available from
http://www.wcoomd.org/en/topics/facilitation/resources/resources.aspx. See also http: //www.wcoomd.org/en/
topics/facilitation/resources/~/media/70998C307D3C47C996DB047B664B92AE.ashx
58 David Hesketh and Sandra Tudor, ―Trade statistics data gathering – a concept for the future, paper prepared for
the Global Forum on Trade Statistics, Geneva, 2-4 February 2011.
59 Ibid., p.9.
86
and the application of uniform but complex processing procedures leading to the clearance of the
goods and the sharing of information with the parties involved. These tasks are greatly facilitated
by the establishment of a single-window environment which provides the benchmark for modern
data management at customs. The implementation of a single window generally entails the
harmonization and alignment of the relevant trade documents and data sets.
8.10. Models of the single window.60
There are three basic models for the single window:
(a) A single authority which receives information, either on paper or electronically,
disseminates this information to all relevant governmental authorities, and coordinates controls
so as to prevent undue hindrances in the logistic chain. For example, in Sweden‘s single window,
customs performs selected tasks on behalf of some authorities (primarily for the National Tax
Administration (import value added tax), Statistics Sweden (trade statistics), Sweden‘s Board of
Agriculture and the national Board of Trade (import licensing));
(b) A single automated system for the collection and dissemination of information (either
public or private) which integrates the electronic collection, use and dissemination (and storage)
of data related to trade that crosses the border. For example, the United States of America has
established a programme that allows traders to submit standard data only once; the system
processes and distributes the data to the agencies that have an interest in the transaction. There
are various possible means of implementation:
(i) Integrated system: data are processed through the system;
(ii) Interfaced system (decentralized): data are sent to the agency for processing;
(iii) A combination of (i) and (ii);
(c) An automated information transaction system through which a trader can submit
electronic trade declarations to the various authorities for processing and approval in a single
application. Under this approach, approvals are transmitted electronically from governmental
authorities to the trader‘s computer. Such a system is in use in Singapore and Mauritius.
Moreover, in Singapore‘s system, fees, taxes and duties are computed automatically and
deducted from the traders' bank accounts. When establishing such a system, consideration could
be given to the use of a master data set, comprising of specific identities, which are pre-identified
and pre-validated, in advance, for all relevant transactions.
8.11. Technical infrastructure. The electronic submission of customs declarations and the
automation at customs require the establishment of an adequate technical infrastructure for data
transmission, data storage, data processing, etc. Costs for hardware and software have declined
significantly and telecommunications technology has advanced in recent years. Nevertheless, the
levels of investment and human resources required to establish an adequate technical
infrastructure for customs automation and the implementation of a single window environment
are high and constitute an obstacle for further automation in many countries.
60
Economic Commission for Europe, United Nations Centre for Trade Facilitation and Electronic Business
(UN/CEFACT), Recommendation and Guidelines on establishing a Single Window to enhance the efficient
exchange of information between trade and government, Recommendation No. 33 (ECE/TRADE/352) (United
Nations publication, Sales No. E.05.II.E.9), pp. 6-8. Available from http://www.unece.org/fileadmin/DAM/
cefact/recommendations/rec33/rec33_trd352e.pdf.
87
3. Examples of automated systems at customs and its interface with statistical data
8.12. Existing single window in Sweden. Sweden‘s present single window system, known as
―The virtual customs office‖ (VCO), allows the submission, by electronic means, of customs
declarations and of applications for import and export licences, for licences for strategic products
and for both import and export licences. It can be further integrated into the business system of
traders and can then automatically update changes in exchange rates, tariff codes and duty rates.
Import and export declarations can be processed through both the Internet and the United
Nations Rules for Electronic Data Interchange for Administration, Commerce and Transport
(UN/EDIFACT). The system currently involves Sweden‘s Customs (lead agency), Sweden‘s
Board of Agriculture, the National Board of Trade, the National Inspectorate of Strategic
Products, the Police, the National Tax Administration and Statistics Sweden.61
8.13. Customs modernization in the United States of America. The International Trade Data
System (ITDS) is a project designed to build an electronic single window for reporting imports
and exports to the Government. Currently, traders must make redundant reports to multiple
agencies (often on paper). ITDS will allow traders to make a single electronic report with the
relevant data being distributed to the appropriate agencies. Costs will be reduced for business
and government; and agencies will obtain data more quickly, be able to process cargo more
expeditiously, and be better able to identify unsafe, dangerous or prohibited shipments. ITDS is
not a separate computer system: ITDS functions are being built into the trade processing systems
of United States Customs and Border Protection (CBP), as part of the Automated Commercial
Environment (ACE) project.62
8.14. Experience of the Philippines: Electronic-to-Mobile (e2m) Customs Project. The e2m
Customs Project is one of the mission-critical and high-impact Information and Communications
Technologies (ICT) projects of the national Government. It seeks to streamline the core
processes of the Bureau of Customs (imports and exports) and improve trade facilitation between
the Bureau of Customs and its stakeholders, including other government agencies, through the
development and integration of various systems allowing Internet-enabled and, later, SMS-
enabled transactions, thus fewer face-to-face transactions, towards the realization of the national
and (ASEAN) single window. Launched in January 2005, this project was financed through a
multimillion dollar grant from the government‘s e–Government Fund of the President, which
was specifically created to finance strategic ICT projects of government agencies. This e-
customs system allows customs officers and traders to handle most of their transactions from
customs declarations to cargo manifest and transit documents through the Internet. It makes use
of advanced technology, including electronic signatures, to provide government officials,
specifically customs administrators, with new tools that will enable them to make dramatic
improvements in security, trade efficiency and the fight against corruption. The e2m system for
the formal entry of imports was fully implemented in the major ports of the Philippines in
August 2010. E2m-customs offers the following enhancements to the current system:
61
Ibid., p. 19. Additional examples are provided on Mauritius, the Netherlands and the United States of America.
62 Report to Congress on the International Trade Data System (ITDS), December 2010 available from
http://www.itds.gov.
88
Online submission of declarations
Automatic advice on declaration status
Engagement of value added service providers (VASPs)
Online submission of manifests by airlines and shipping lines, including de/consolidators
Automated process for other types of import transactions such as informal (including the
passenger baggage system), warehousing and transshipment entries
Automated process of liquidation of raw materials
Centralized management of bonds transactions
Links with relevant government agencies
Online resource access through the Bureau of Customs website on issuances, processes,
policies, guidelines and other related information
8.15. Experience of Brazil: Sistema Integrado de Comercio Exterior (SISCOMEX). Brazil
processes its foreign trade data through a computerized system (SISCOMEX) which collects and
records, in a single flow, information and procedures concerning foreign trade operations in the
country. The collected data are reported by various governmental and private agents and
standardized, creating a single document at the end of the process. All recorded information is
stored in the system for retrieval by users at any time.
(a) The philosophy of SISCOMEX is based on:
Harmonization of concepts, standardization of codes and nomenclatures
Elimination of controls and parallel systems of data collection
Simplification (and avoiding bureaucracy) of foreign trade operations
Generation of a single document at the end of the process
Preservation of the basic functions of managers
Reduced administrative costs for all involved in the system
Critical parameter data
Preparation of timely trade statistics
(b) The advantages of SISCOMEX are:
Online system
Simplification and acceleration of the process
Information provided only once
Automatic granting of permits
Ease of access/free from use by intermediaries
Cost reduction with dispatch and storage of documents
Availability 24 hours a day, 7 days a week
Transparency of administrative controls
News SISCOMEX: timely information about changes in the administrative
processing of Brazil‘s foreign trade
Enabling legal representation by the company itself, directly through the system
Security and integrity in processing operations
8.16. Automated System for Customs Data (ASYCUDA). ASYCUDA is a computerized
customs management system that covers most foreign trade procedures and has been
89
implemented in many countries.63
The system handles manifests and customs declarations,
accounting procedures, and transit and suspense procedures. It generates trade data that can be
used for statistical and economic analysis. The ASYCUDA software has been developed by
United Nations Conference on Trade and Development (UNCTAD) in Geneva and operates on
microcomputers in a client server environment. ASYCUDA is fully compliant with international
codes and standards developed by the International Organization for Standardization (ISO),
WCO and the United Nations. ASYCUDA can be configured to suit the national characteristics
of individual customs regimes, national tariffs and legislation. The system also provides for
electronic data interchange (EDI) between traders and customs using UN/EDIFACT (United
Nations rules for Electronic Data Interchange for Administration, Commerce and Transport).
The most recent Web-based version of ASYCUDA will allow customs administrators and traders
to handle most of their transactions through the Internet.64
8.17. Interface to statistical data: examples of ASYCUDA. A group of predefined statistical
reports which are produced on the server can be obtained as either a server printout or electronic
files. However, most statistics from ASYCUDA++ are obtained through SQL, which is used to
create reports or database extractions not covered by the standard reporting formats. Writing
SQL queries requires specialist technical skills, and access to the database to run them is
normally restricted, for both security and performance reasons. ASYCUDA++ has an interface
which allows for the extraction of declaration and reference data from the ASYCUDA database
in a format compatible with Eurotrace.65,66
Work is currently under way (as of July 2011) to add
in ASYCUDA a statistics data extraction module which complies, to the extent possible, with the
requirements of IMTS 2010 (see table VIII.1) below, specifically for international reporting in
detailed trade statistics. A predefined data extraction module will facilitate the trade data flow
from customs to compilers.
C. Data processing and database management at the responsible agency
1. Characteristics of data processing, data flow and data transformations
8.18. Characteristics of data processing at the responsible agency in contrast with other
statistical activities: The statistical processing of merchandise trade data involves dealing with
large numbers of data sets of relatively simple structure. These data sets are in general obtained
from customs declarations and received from customs. Further characteristics are the use of
extensive and usually automated validation and quality checking procedures, the storing of
63
According to UNCTAD, it is used or being implemented in more than 90 countries. See UNCTAD Trust Fund for
Trade Facilitation Negotiations, ―Automated System for Customs Data ASYCUDA‖, Rev. 1, Technical Note No.
21, January 2008.
64 See Recommendation and Guidelines on establishing a Single Window to enhance the efficient exchange of
information between trade and government, pp. 31-32. See also footnote 59.
65 Eurotrace is a computer system that manages external trade statistics, allowing input of declaration and reference
data into a number of different ―statistical data banks‖. These data banks are used to pull together figures in order to
provide statistics on foreign trade, transport, financial details and taxes.
66 For user technical information on ASYCUDA, see http://www/asycuda.org/asyverions.asp. The Central Statistical
Office of Trinidad and Tobago provides an example of data extraction from ASYCUDA and importation into
Eurotrace (see http://www.cso.gov.tt/news/article/2012/01/26/eurotrace-trade-statistics; and para. 8.22 below).
90
processed data and metadata in well-maintained databases capable of performing customized
data queries, and timely provision to users of large data sets in various formats. All these
activities imply the intensive use of information technology which frequently requires that
significant IT resources be specifically dedicated to trade statistics. Particular challenges for
statistical data processing can arise when revisions or corrections need to be coordinated and
agreed between customs and the responsible agency. A further potential difficulty is the
integration of data from other sources, as those data, for example, might not follow the required
standard format.
8.19. Data transformations. The following data transformations are often executed at the
responsible agency: suppression or removal of certain information (due to issues of
confidentiality or quality), correction of existing data and supplementation of existing data
through estimation or other means (i.e., if certain characteristics are not provided).
Box VIII.1
The statistical production process: example from Italy
The production process carried out by ISTAT encompasses a number of tasks/production stages
which ranges from the upload of raw customs data to the release of official data on external trade
statistics. In particular, they include:
(a) Automatic upload or manual data entry of customs data;
(b) Exclusion of trade flows not relevant for the compilation of external trade statistics;
(c) Standardization of customs data according to statistical standards, including both
classification and analytical variables;
(d) Rapid detection and revision of major outliers, having significant impact on the aggregate
trade figures published as flash estimates or preliminary data;
(e) Thorough analysis and revision of outliers at the product/country level, including mis-
classification problems at the product, country or other statistical variables level;
(f) Estimation of a possible random item or unit (non-response problems);
(g) Estimation procedures related to ―structural biases‖ in customs data, such as systematic
delays in data transmission, under coverage due to the adoption of exemption thresholds, etc.;
(h) Estimation of peculiar external trade flows not covered, or poorly covered, by custom data.
These activities require relevant efforts in terms of both hardware and software. The hardware
component includes the presence of relevant data storage capability and an appropriate stock of
human resources devoted to each stage of the production process. The software component is
more intangible but nevertheless crucial for the production of high-quality trade figures. It refers
to the stock of knowledge and technical capabilities on data management, data classification and
data analysis which is only partially codified in standard IT and statistical procedures; rather, it is
mainly embodied in the human capital devoted to the production of trade statistics. It concerns,
for example, knowledge on the best way to check, revise and classify specific trade flows, based
on an extensive knowledge of product characteristics and feedback from trade operators and
external experts.
As a result, the successful management of trade statistics by ISTAT requires the setting up of an
appropriate division of labour which takes into account not only the hardware but also the
91
software components of the external trade statistics production process. In particular, it is
recommended that:
(a) An efficient IT framework for the upload and management of customs data be designed, with
a dedicated pool of IT technicians;
(b) A sound methodological approach to outliers detection be designed and implemented;
(c) A limited pool of specialized clerks with an extensive knowledge of product characteristics
needed to manage data-quality problems be established and maintained. In particular, the criteria
adopted for assigning a given group of products to each expert should be consistent with human
resources constraints and in line with national trade characteristics;
(d) A risk management approach be adopted to clearly identify critical bottlenecks in the
production process which may represent a relevant threat in terms of data quality or timeliness in
published trade figures.
8.20. The role of customs. Custom declarations are the main and usually preferred data source
for merchandise trade statistics. Not only are customs authorities providing this information to
the responsible agency, but, they have a very strong influence on the quality of the information
provided (see chapter IX for details, in particular para. 9.5 on data processing and validation). In
this context, it is critical that customs work with the traders or brokers who enter the information
to ensure that the data required for statistical purposes are adequately captured in the customs
declarations. At the same time, the responsible agency needs to make customs aware of these
requirements (see chap.V for details).
2. Examples of data processing systems at the responsible agency
8.21. Eurotrace software: data- processing software for external trade statistics. The
Eurotrace software, distributed free of charge by Eurostat and implemented in many developing
countries,67
allows (a) the importation and management of the data necessary to the
development of the external trade statistics (in particular the customs data), (b) the treatment of
these data, in particular through carrying out quality controls and the application of standards, (c)
the working out and calculatation of a certain number of aggregates, in particular indices of
foreign trade and (d) their export for dissemination and publication. Eurotrace consists of the
following separate applications that work together: Eurotrace DBMS, the Eurotrace Data Editor
and the Comext Standalone Data Browser.
8.22. Eurotrace applied in Trinidad and Tobago.68
The Central Statistical Office (CSO) of
Trinidad and Tobago has developed a Eurotrace application which has transformed its trade
statistics data dissemination. As a result of the implementation of the Eurotrace Trade Statistics
application, the time taken to respond to a wide array of ad hoc data requests from international,
67
Eurotrace is implemented by countries in Africa but also in some countries in Asia and the Caribbean. It is
supported by Eurostat as part of the European Union development cooperation in the Africa, the Caribbean and
Pacific Group of States (ACP) (see http://circa.europa.eu/irc/dsis/eurotracegroup/info/data/en/users.html).
68 The information provided is taken directly and derived from the following document: Central Statistical
Office,―EUROTRACE applied to Trinidad and Tobago trade statistics: overview document‖, Ministry of Planning,
Economic and Social Restructuring and Gender Affairs, Trinidad and Tobago, 12 October 2010.
92
regional and local data users has been significantly reduced.69
Further improvements depend
largely on the implementation at customs of ASYCUDA which would replace the current system
of manual data capture based on copies of declaration forms. The proposed future data flow will
be greatly simplified and will consist of data reception from ASYCUDA, importation to
Eurotrace, validation in Eurotrace, upload of validated data and data extraction/direct data
download through the Comext Browser.
D. Data fields required for statistical purposes
8.23. Minimum requirements. The statistical information needs require the provision of the data
fields shown in table VIII.1.
Table VIII.1
Required data fields
Field name Recommended field content
Reference year Gregorian calendar (January through December) ) : in
YYYY format (e.g., 2011, 2012, …)
Period Annual, monthly or quarterly period identification (e.g.,
M01, M02, …, Q1, Q2, …, A00)
Trade flow a
―Imports‖, ―Re-imports‖, ―Exports‖ and ―Re-exports‖
Commodity code According to the Harmonized System (HS) at the most
detailed commodity level available (six-digit HS)
Partner country or area In national nomenclature; country of origin (for imports)
and country of last known destination (for exports)
Value Monetary value (in national currency or United States
dollars); CIF for imports and FOB for exports
Net weight b Physical quantity (in kilograms)
Supplementary quantity Physical quantity (in the WCO recommended standard
units of quantity)
Supplementary quantity unit Description of units of quantity employed for
supplementary quantity data (e.g., ―Number of items‖)
New data fields following the adoption of IMTS 2010 (include if already available)
Second partner country or area In national nomenclature; country of consignment for
imports and country of consignment (destination) for
exports
Second value for imports c Monetary value (in national currency or US dollars); FOB
for imports
69
Further information on the management, technical requirements, lessons learned during implementation and
possible future improvements is provided in the above-cited document as well as in the following document: Central
Statistical Office, ―Technical brief: 2nd Regional Award for Innovation in Statistics - EUROTRACE applied to
Trinidad and Tobago trade statistics‖, Ministry of Planning, Economic and Social Restructuring and Gender Affairs,
Trinidad and Tobago, 20 August 2010.
93
Mode of transport Means of transport used when goods enter or leave the
economic territory (in the nomenclature encouraged and
provided by IMTS 2010, para. 7.2, or national
nomenclature)
Customs procedure code (or
applicable transaction code) d
Code of the customs procedure applied to individual
transactions by customs; any applied procedure or
transaction code if customs procedure codes are not
available or if additional codes are used a Some countries are able to identify the trade flow through the customs procedure code; however, it is advised that,
for the time being, all countries provide the field trade flow in their data. b It is recommended that net weight be provided (see IMTS 2010, para. 5.5). However, some countries are able to
provide only gross weight. c According to IMTS 2010 (para 4.9), countries that compile only CIF-type value for imported goods are encouraged
to compile separate data for freight and insurance, at the most detailed commodity and partner level possible. This
would apply to countries that compile only FOB-type values. d This information is requested to obtain additional information about certain trade transactions for statistical
purposes such as re-exports, reimports, goods for processing and intra-firm trade. However, national practices in the
use of customs procedures vary considerably and it might not always possible to derive the desired information.
8.24. Experience of the Philippines. In 2003, the National Statistics Office of the Philippines
entered into a memorandum of agreement with the Bureau of Customs, for the latter to provide
the National Statistics Office with an electronic copy of the data obtained from customs
documents and generated using the electronic system. The information items contained in the
extracted data files shall contain the following variables:
(a) For exports, from the Automated Export Declaration System, this will include customs
control number, country of destination, commodity description, gross weight (in kilograms),
quantity, preferential treatment, FOB value, insurance cost, freight cost, local port of unloading,
local port of destination, importer‘s TIN, feeder/direct carrier‘s name, type of handling/packing,
and registry number.
(b) For imports, from the Automated Cargo Operating System, this will include customs
control number, country of origin, commodity description, gross weight (in kilograms), quantity,
preferential treatment, value of imported raw materials, FOB value, insurance cost, freight cost,
local port of loading, local port of origin, exporter‘s TIN, feeder/direct carrier‘s name, type of
handling/packing, and registry number.
8.25. Information relevant or required for the completion of the customs declaration. The
information normally required for the completion of customs declaration forms that is relevant
for compilation of trade statistics (either for inclusion into statistics or for verification purposes)
includes that shown in table VIII.2. It should be noted, however, that not all information items
listed in the table are required in all countries.
94
Table VIII.2
Information relevant or required to complete a goods declarationa,b
Point of import/export: the point at which the goods actually enter or leave the customs
territory of a country
Date of importation/exportation: for imports, the date on which the carrier transporting
the goods arrives at the customs territory; for exports, the date of departure or date of
clearance
Date of lodgement: the date on which the customs accepts the declarations submitted by
importers, exporters or their agent
Importer/exporter: in general, refers to the party in the customs territory who signed the
contract of purchase/sale and/or who is responsible for executing the contract (i.e., the
agent responsible for effecting import into or export from a country). Each importer or
exporter is usually assigned a unique identification number c
Nature of transaction (e.g., purchase/sale, processing, barter, lease, gift)
Mode of transportation: the type of carrier which transports the goods into or out of the
customs territory (e.g., sea and water, rail, road (truck), air, postal, other)
Carrier identification: the name and the voyage/flight/wagon/vehicle number of the
carrier actually transporting the goods into or out of the customs territory
Bill of lading/airway bill: the importing or exporting carrier‘s bill of lading, airway bill
number, rail receipt number, post office number
Consignee/consignor: the party to whom goods are consigned/the party who consigns the
goods
Country of consignment: the country from which goods were dispatched to the importing
country (to which goods were dispatched from the exporting country), without any
commercial transactions or other operations that change the legal status of the goods
taking place in any intermediate country
Customs procedure (regime): the type of customs procedure under which imported or
exported goods are cleared from customs
Licence number: validated import or export licence number, for goods subject to import
or export licence
Related party transaction (i.e., one between parent company or sister company)d
Location of domestic consumer/producer: location of domestic consumer refers to the
location in the customs territory for which imported goods are destined or where they will
be ultimately consumed or utilized. Location of domestic producer refers to the location
in the customs territory where the exported goods are produced or manufactured or from
which the goods actually start their journey to the point of export, if the origin of
production is unknown
Port of loading/destination: ―port of loading‖ means the last foreign port where the
imported goods were loaded on the carrier that brought them to the compiling country;
―port of destination‖ means the ultimate foreign port for which the exported goods will be
designated;
95
Terms of delivery: the transaction terms of delivery is required to be reported, usually the
Incoterms 2000 rules
Freight: the freight charges
Insurance: the insurance charges
Unit value: the price actually paid for one unit (by quantity unit) of the given commodity
when sold for exportation to the compiling country or purchased for importation from it,
or the cost of one unit of the commodity if not sold or purchased
Total value: the price actually paid for all units (by quantity unit) of the given commodity
(unit price multiplied by quantity), or the cost of the commodity if not sold or purchased
Customs value: the value of goods established in accordance with the customs law of a
country
Type of financial transaction: an indication of payment method
Unit of account: the currency in which it is required that the transaction that has occurred
be reported
Statistical value: the value assigned to goods by a compiler of trade statistics, according
to the rules adopted by the compiling country
Number and kind of packages: the number and kinds of packages (bulk, boxes, barrels,
baskets, etc.)
Marks: marks or other identification shown on the packages and the numbers and kinds
of packages (boxes, barrels, baskets, etc.)
Commodity code: usually the HS-based code, where the first six digits are the HS codes
and the others are national extensions
Commodity description and specification: a description of the commodity sufficient to
permit verification of the classification code or the description and specification, as
shown on the validated import or export licence
Gross weight (kilograms): the gross weight of shipments, including the weight of
moisture content, packings and containers (other than containers, such as cargo vans and
similar substantial outer containers used for containerized cargo)
Net weight (kilograms): the net shipping weight, excluding the weight of packages or
containers
Domestic or foreign goods: specification of whether the good is of domestic or foreign
origin
Quantity and quantity unit: the amount reported in terms of the unit(s) adopted by
national legislation; in many cases, they are based on the standard units of quantity
recommended by WCO. It is also required that the unit of quantity specified in the
transaction be reported, if it is other than the customs standard units
Country of origin: as established in accordance with the country‘s rules of origin;
Country of destination (also called country of final or ultimate destination): the country
in which the merchandise is to be consumed, further processed or manufactured; the final
country of destination as known to the exporter at the time of shipment or the country of
ultimate destination as shown on the validated export license. Two- or three-digit (alpha
96
character) International Organization for Standardization (ISO) codes or other codes may
also be used
Tariff preference, if any
Producing/importing State or province
Form of payment
Agent's commission
Date of shipment or discharge
Country of purchase a However, not all types of information are mandatory for many customs procedures. b For an example, please see annex II.A.
c For example, China uses a 10-digit ID number structured as follows: first 5 digits: location of the importer or
exporter (city, province, special economic zone, bonded area, high-tech industrial development area, etc.); sixth
digit: category of importer or exporter (State-owned enterprise, Sino-foreign contractual joint venture, Sino-foreign
equity joint venture, foreign-owned enterprise, collective enterprise, private enterprise, other); last 4 digits: serial
number. d Many countries do not include this requirement; countries have different criteria for determining whether parties
are related. See chap. XXI for further details.
97
Chapter IX
Data quality: assurance, measurement and reporting
9.1. Introduction. The present chapter is based on IMTS 2010, chapter IX (on data quality and
metadata). It provides an overview of quality assurance at customs and the responsible agency.
Major quality issues are identified and discussed, including issues related to the editing of data
and the responsibilities of each agency. Further, the chapter describes the process of producing
quality reports and the measurement of quality, and provides examples and best practices. A
special section is dedicated to reconciliation studies, cross-country comparability and bilateral
data exchanges. Data quality assurance and reporting are essential for producing and
disseminating trade statistics that are of the highest possible quality. This chapter aims to provide
relevant information and to describe good practices so as to guide countries in making quality
assurance, measurement and reporting operational. Data quality is a cross-cutting task and is
touched upon throughout the Manual. This chapter is linked, in particular, with chapter V on
institutional arrangements.
9.2. Quality management system. Data quality assurance, measurement and reporting must be
viewed as parts of a quality management system, often called a quality management framework
(QMF). A QMF often contains the following elements: (a) a quality policy which affirms the
commitment to quality management, (b) a quality model which provides a definition of quality,
often formulated in terms of the components of data quality, (c) quality objectives, standards and
guidelines, (d) quality assurance procedures which are often part of the production process, (e)
quality assessment procedures, (f) quality measurement procedures and (g) quality improvement
procedures.70
A. Quality assurance
1. An Overview of the main elements of national quality assurance frameworks
9.3. Systematic approach to quality assurance. IMTS 2010 promotes a systematic approach to
data quality. This means that all aspects of the entire trade statistics program are to be examined
and evaluated against certain principles and standards in order to more effectively identify and
implement appropriate action to further improve data quality (see IMTS 2010, para. 9.4). The
treatment of quality assurance in the present section entails a narrower focus, on data quality, as
the section examines only some of the specific issues considered and actions commonly taken,
by customs and the compiling agency to assure the accuracy of the statistical information within
the existing setting of data compilation.
9.4. Methodological soundness. Quality assurance requires the adoption, application and
enforcement of a conceptual framework for foreign trade statistics, preferable in line with the
international recommendations. Decisions in respect of treatment of transactions in specific
categories of goods (scope of trade statistics), and of transactions destined for or originating in
certain territorial elements, their classification and valuation, quantity measurement and
70
See Eurostat, ESS Handbook for Quality Reports, 2009 edition, Eurostat Methodologies and Working Papers,
(Luxembourg, Office for the Official Publications of the European Community, 2009), p.15.
98
attribution of partner country are part of the daily work of customs officers and trade statistician
and require the existence of a clear methodological framework. Any automated quality assurance
and data validation must be based on and derived from the conceptual framework adopted by a
country.
9.5. Data processing and validation: types of checks and tools. Statistical data processing
requires the capture of individual trade transactions, the creation of trade records, and their
validation and integration into data sets encompassing all the records of a specific period.
Validation checks are commonly used for: completeness, validity of codes, range check of
values, internal consistency and aggregate consistency. Often, the estimation and insertion of
missing values and codes are integrated into the completeness check. Tools for validation include
validation at data entry (―in dialog‖), batch validation with the creation of error lists, generation
of error statistics, flagging of significant transactions, classification of errors into certain versus
possible errors and automated versus manual error correction. The inclusion of additional
sources of information usually requires manual corrections as such information is external to the
system. In some offices, manual corrections will always require that additional and/or external
sources be used (e.g., by contacting the declarant). However, it might not always be possible to
obtain the additional information in the time available, and manual corrections might be made
without the use of such additional sources.
9.6. The information problem at data entry. The starting point of the statistical quality
assurance process is the point at which the information is provided.71
This usually occurs when
the customs declaration is completed, as customs records are the main, and normally the
preferred, data source for merchandise trade statistics. Customs declarations are themselves
administrative records containing selected information about commercial (or non-commercial)
transactions and the logistics of moving the goods from the seller to the buyer (or from the
sender to the receiver). Usually, the information on the customs declaration is entered separately
and is not, for example, derived electronically from existing information; hence, those
completing the customs declarations (commonly the shipping agent or trader) might not have
complete information about the transaction, logistics and subsequent transactions.
9.7. Data entry. The most important stage of quality assurance for trade statistics occurs when
the required information is entered into the customs declaration, as the agent or the person
completing the customs declaration should have available all the required information to the best
possible extent. Electronic data entry systems allow the implementation of comprehensive
validation rules which can prevent certain types of typing errors, entry of invalid or implausible
codes, and entry of values outside a certain range, as well as invalid or implausible combinations
of entries. The development and implementation of such rules require significant knowledge and
investment in the IT system. Also, the validation systems need to be carefully designed so as not
to obstruct the entry of accurate information or invite ―gaming with‖ or circumventing the
validation system, thereby leading to a deterioration of data quality.
71
In fact, quality assurance starts even before, when data providers and, in particular, agents at customs are informed
and trained regarding the statistical (customs) requirements regarding the information provided.
99
2. Quality assurance at customs
9.8. Priorities. Security and safety and the collection of revenue are the core functions of
customs and can be viewed as the prime objectives of data quality assurance at customs.
Therefore, the customs information on imports is in many countries considered as being of
higher quality than the data for exports, as customs duties usually apply only to imports and not
to exports. However, this traditional view is not an adequate description of the situation in many
countries. Many customs offices have statistical units that aim to ensure comprehensively the
quality of statistical information. Quality assurance, seen as a comprehensive concept and
supported by the automation at customs, will lead to an improvement in quality of all elements of
the data. Further, the concept of an integrated data pipeline extending from the buyer to the seller
(see para. 8.8 above) demonstrates than an emphasis solely on import information is outdated,
since in a possible future global customs system, the information for export and imports will be
integrated and treated as two sides of one transaction.
3. Quality assurance at the responsible agency
9.9. Characteristics. The responsible agency is expected to conduct a systematic quality
assurance programme covering all elements of the statistical information, using the full range of
validation checks and tools as specified in paragraph 9.5 above and ensuring the timeliness of the
information provided to users. A special focus is often given to the aggregated data and the final
results which are compared with the ones from previous periods. However, frequently, special
attention is also given to certain transactions that might be of particular importance or of high
value, or might be potentially outside the scope of IMTS (e.g., goods for repairs and transactions
in ships and aircraft). Often, the responsible agency has or can gain access to the original record
and its accompanying information at customs. In many ways, the quality assurance at the
responsible agency depends on data provision by and cooperation with customs, unless, of
course, customs itself is the responsible agency.
4. Major quality issues and how to approach them
9.10. Main quality issues from the user’s perspective. Gaps in coverage, asymmetries in partner
information, unreliable quantity information and insufficient timeliness are often perceived as the
major quality issues associated with international merchandise trade data. The issues raised are
discussed briefly below. However, certain country practices, discussed further on this
publication, address some of these issues in more detail.
9.11. Coverage. Some major coverage issues such as the application of the special trade system
or the need for confidentiality of certain transactions are beyond the scope of the regular quality
assurance at the responsible agency. However, in many countries, transactions in certain
commodities, such as oil, gas, electricity, raw materials, ships and aircraft, are not or not
adequately captured by customs or by the responsible agency. In other countries, border or
shuttle trade maybe important but is not fully recorded by the responsible agency. Lack of
coverage can also arise in the case of the applications of various thresholds for simplification
purposes at customs (see chap. XIX, sect. E). Possible approaches to these issues of coverage
entail use of additional data sources and, if necessary and appropriate, addressing them with the
100
relevant governmental authorities, which, for example, can mandate that information be made
available to statistical authorities. In the case of trade below certain reporting thresholds,
appropriate estimation methods might need to be developed.
9.12. Asymmetries in partner data. Asymmetries in partner data, that is, differences between
the compiling country‘s own data on exports and imports and the partner country‘s data on
imports and exports, can have multiple causes, including differences in the time of recording,
differences in the classification of commodities, partner-country attribution, trade system,
confidentiality, etc., and many bilateral studies have been conducted to examine this issue and to
reduce these asymmetries. However, an important factor in these asymmetries is trading partner
information which may be impossible to align owing to conceptual as well as practical factors,72
in particular in the case of global value and supply chains. In order to improve the situation,
IMTS 2010 strengthened the recommendation to provide the country of consignment as second
partner with information not only for imports but also for exports (see IMTS, para. 6.26). As
indicated, one way to examine and address these asymmetries is to conduct reconciliation studies
(see sect. C).
9.13. Quality of quantity information. Many users and producers of trade statistics agree that
quantity information (quantity in WCO standard units of quantity and net weight, where the
standard unit is different from net weight) is the weakest data element in the core data set for
trade statistics. In some countries, the provision of quantity or net weight is not mandatory,73
and
often the information is not complete for other reasons. Information on quantity is internationally
comparable only when reported by countries in a uniform manner. However, often quantities are
reported in units different from the ones recommended by WCO for each specific commodity.
An important quality problem is the incorrect reporting of the quantity or net weight, which
might be difficult or impossible to determine. There are several possible means of improving the
quantity information. For example, as part of a standardized quality assurance procedure,
suspicious high-quantity values could be identified and the data provider contacted to verify
them; or suspicious or missing quantities could be replaced with estimates based on the data
provided by the same firm or other reporters. A further option is to use additional data sources
such as shipping documents to verify the quantity information. Yet another possibility is to allow
data providers to estimate missing information using empirical values or to allow the provision
of quantities in quantity units from which standard units of quantity or net weight could be
derived using appropriate conversion factors. Whatever the method used, it should be
documented in the metadata that are made available to users.
72
For imports, it is recommended that the country of origin be recorded. However, there is no uniform definition of
―country of origin‖. Further, it might become more difficult to determine the country of origin if a country belongs
to a customs union, as more and more countries do. For exports, it is recommended the county of last known
destination be recorded, although the objective is to obtain the country of last or final destination. As indicated in
para. 9.6 above, those completing the customs declaration might not have full information about the transactions to
which the goods have been subjected, nor about future transactions.
73 In the European Union Intrastat system, it is not mandatory to provide net weight if the supplementary quantity
(WCO standard units of quantity) is different from net weight; however, member States are obliged to estimate net
weight when not collected.
101
9.14. Quantity aggregation. The quantity and net weight information provided by countries at
the six-digit level of HS is frequently an aggregation of multiple trade transactions. Usually each
transaction has a trade value, but the same is not true for net weight and quantity values, which
can be missing. Further, quantity data for various transactions within the same six-digit
commodity code might be reported in different quantity units. Hence, countries generally need to
apply estimations for any missing net weight and quantity data and conversions or estimations
for any non-standard quantity units in order to provide information on net weight and quantity at
different levels of aggregation, or to refrain from providing aggregations that are not of sufficient
quality. The difficulties in quantity and net weight aggregation constitute a quality issue on their
own which has to be carefully addressed in view of the multiple and growing uses of these data,
including for health and environmental policymaking. It is good practice for the responsible
agency to work closely with customs on this issue.
9.15. Timeliness. The relevance of trade statistics is greatly increased if the data are provided in
a timely manner. However, in many countries, the information is provided much later than
suggested (see IMTS 2010, para 10.7) requiring data users to make their own estimates. One
means of improving the timeliness of information is to review the data production process in
light of existing best practices and to publish preliminary data (ibid., para. 10.8).
5. Country examples and best practices
9.16. Effect of mandatory electronic filing on export data: experience of the United States of
America.74
Effective 2 July 2008, the United States Census Bureau began requiring mandatory
filing of export information through the Automated Export System (AES) for all shipments
where a Shipper‘s Export Declaration (SED) was required. The implementation of the
regulations and subsequent move to an all automated data collection process had an overall
positive impact on the quality, coverage and timeliness of export data. These improvements have
been achieved through more complete and timely data collection through the AES system,
upfront validation checks of data, and reduced reporting and keying errors. Most errors involve
missing or invalid commodity classification codes and missing or incorrect quantities or shipping
weights. The AES contains online validation checks which immediately detect reporting errors
and refer those errors back to the filer for correction before the data can be submitted. This has
resulted in a significant decrease in reporting error rates on export transactions. The timeliness of
the data has also eliminated the need for estimation of data that were received too late. Risks
associated with electronic filing include unresolved edit failures which could result in
undercoverage and underestimations by filers. The AES Report Card provides a tool for the
monitoring of filers and for identifying thereby further actions to improve quality.
9.17. Statistical quality assurance in the case of Brazil. Brazil publishes its international
merchandise trade statistics one day after the end of the reference period (monthly and weekly),
which is made possible mainly because of the use of a ―preventive validation‖ methodology in
74
The information presented is derived from the information note entitled ―Effect of mandatory electronic filing on
export data‖ 14 January 2009. Available from: http://www.census.gov/foreign-trade/aip/
mandatoryelectronicfiling.html.
102
Brazil‘s SISCOMEX system. SISCOMEX is a computerized system which integrates customs,
commercial and foreign-exchange information.75
Annex IX.A explains its mains functions.
9.18. ASYCUDA: data quality assurance, measurement and reporting. In any computer
system, the quality of the data entered for processing or storage is of paramount importance, as
wrong data can jeopardize all of data processing and can yield incorrect results. In this regard,
the Automated System for Customs Data (ASYCUDA) ensures the highest quality of the keyed-
in or imported data by performing several types of data validation and control. Some of them are
set to be mandatory and others are configurable (to be mandatory or remain optional) depending
on specific needs and national circumstances. The following types of data validation and control
are integrated into ASYCUDA: (a) existence controls, (b) data format controls, (c) referential
and validity controls, and (d) consistency controls; in addition, ASYCUDA provides a statistical
reporting module that can also be used for validation purposes (see annex IX.B for details).
9.19. Harmonized framework for data validation: Eurostat.76
Eurostat proposed for utilization
by European Union member States a harmonized framework for data validation in external trade
statistics which covers the trade in goods not only between countries of the European Union
(intra-EU trade statistics) but also of members countries with countries outside the European
Union (extra-EU trade statistics). Regarding extra-EU trade statistics the following is covered:
(a) validation of the input data by the customs offices, (b) validation of the input data by the
competent national authorities (responsible statistical authority), (c) validation of the output data
by the competent national authorities and (d) validation of the output data by Eurostat.
9.20. Validation rules. The validation rules specify acceptable values for the different
variables, the appropriate controls and checking rules, metadata, possible errors and actions in
case of errors. The fields (or variables) of a record (single administrative document (SAD) are
checked for whether the values (codes) comply with the permitted entries (i.e., 1: imports; and 2:
exports), whether the combination of values (codes) of two or more fields are permitted (e.g.,
commodity code against mode of transport), whether numerical values or combinations of
numerical values (e.g., statistical value against quantity expressed in net mass) are within a
certain range, and whether aggregated numerical values (e.g., aggregated statistical value by flow
and commodity code) are within a certain range.
75
The Government control of Brazil‘s foreign trade, which is decentralized, consists of three elements: commercial,
customs and foreign-exchange controls. The administrative (commercial) control determines what goods can or
cannot enter or leave the country, and is under the responsibility of the Secretariat of Foreign Trade of the Ministry
of Development, Industry and Foreign Trade and other consenting agencies. The customs control covers the
verification of documents and the examination of goods under the regular tax by Brazil‘s customs (Ministry of
Finance). The exchange control is performed by the Central Bank of Brazil on the delivery or receipt of foreign
exchange related to goods imported and exported. SISCOMEX is the administrative tool that integrates the activities
of registration, monitoring and controlling foreign trade operations by a computerized single flow of information.
Exports are controlled by two registers in SISCOMEX: export registration (RE) and credit registration (RC). Export
registration confers the "authorization to export" and must be requested before the goods are shipped abroad. The
export processing begins with export registration and the provision of commercial, financial, fiscal and exchange-
rate information. Currently, the agency of Brazil responsible for producing foreign trade statistics, Foreign/Trade
Secretariat Foreign Trade Planning and Development Department (SECEX/DEPLA), is responsible for the
validation of specific fields of export registration.
76 See Eurostat, ―Proposal for a harmonized framework for data validation in external trade statistics: 2010 version‖.
103
9.21. Application of the validation rules. These validations referring to individual SADs are
expected to be performed through automated systems at customs, while the responsible agency
would perform at the input data stage only a few additional checks on the aggregated data.
However, in respect of the output data, the responsible agency would perform similar validation
checks of all output fields (sections) to ensure correct values. The output data validation at
Eurostat would not repeat the previous checks but would mainly check for outliers, in particular
as Eurostat would strive to harmonize settings (calibration) of validation limits and thresholds for
automatic correction in the validation rules for numerical fields (variables). The annex to
harmonized framework presents in summary the statistical methods proposed for the validation
and correction of numerical variables, as well as the methodological procedure to be followed for
the editing of combinations of categorical variables.
9.22. Validation rules of the Eurotrace DBMS.77
The Eurotrace DBMS allows the definition of
validation rules to control and maintain the quality of data within a data set. The rules are
established as so-called tests and usually take the form of combinations of logical or numerical
queries ranging from simple to complex. The test language supported by Eurotrace is SQL78
. The
validation rules are based on the concept that a record is made up of codes and values. The codes
can be checked against ―dictionary‖ lists of valid codes, while values can be validated against
ranges of acceptable values. A very simple check would consist of verifying whether a record
has important values missing. However, much more complex tests can be defined and various
tools for doing so are provided. A set of validation rules (called an algorithm) can be applied
when importing data into a data set from a file, when exporting data out to the Eurotrace editor,
and when importing data back into a data set from the Eurotrace editor after an editing session.
Errors are best corrected by using the Eurotrace Editor program which has been designed to edit
Eurotrace data easily.79
B. Quality measurement and reporting
1. Steps and guidelines for producing data quality reports
9.23. Steps to be considered. Some information about data quality is available in all offices
involved in the compilation and dissemination of official trade statistics and its compilation often
provides the starting point for a quality report or might already be considered to be a quality
report. The following considerations (or steps) that are suggested for the production of a data
quality report for merchandise trade statistics also appear to be relevant when a quality report
already exists but is being reviewed:
(a) Collection and review of existing standards, guidelines, requirements, practices,
examples or past quality reports within the same office or other offices within the same country
or in other countries, including regional and international organizations, as appropriate, in order
to ensure that standards and best practices are followed;
77
See Eurostat, ―Eurotrace DBMS, version 2.2: user guide‖ (European Commission, 2003), pp. 220-275.
78 More specifically, SQL for the Microsoft Access Jet Database Engine.
79 See, ―Eurotrace Editor: user guide‖ (European Commission, 2003).
104
(b) Discussion and decision on the scope and type (purpose) and frequency of the quality
report under consideration and on the available resources;
(c) Assembly of a team and allocation of resources;
(d) Elaboration and discussion of the detailed structure of the quality report;
(e) Compilation of the required information: quality assessment and measurement;
(f) Drafting of report;
(g) Review of report;
(h) Dissemination and communication of the report and its results.
9.24. Guidelines for the production of quality reports in the ESS. Within the European
Statistical System (ESS), very strong efforts have been undertaken to develop a concept of
quality and to implement it comprehensively. A central achievement was the adoption of the
European Statistics Code of Practice, which provides a broad conceptual framework for viewing
quality and sets standards for the institutional environment, statistical processes and statistical
outputs. The ESS Standard for Quality Reports issued by Eurostat80
provides recommendations
for preparing comprehensive quality reports for the full range of statistical processes and their
outputs. The ESS Handbook for Quality Reports81
provides much more detailed guidelines and
examples of quality reporting practices.
9.25. Specific objectives of the ESS guidelines. The specific objectives of the ESS guidelines
contained in the ESS Standard for Quality Reports are; (a) to promote harmonized quality
reporting across statistical processes and their outputs within a country and hence to facilitate
comparisons across processes and outputs; (b) to promote harmonized quality reporting for
similar statistical processes and outputs across countries and hence to facilitate comparisons
across countries; and (c) to ensure that reports include all of the information required to facilitate
identification of statistical process and output quality problems and potential improvements.
9.26. Structure of the ESS guidelines. The guidelines are organized by statistical output and
process quality components, with the primary section headings being:
1. Introduction to the statistical process and its outputs (an overview to provide context)
2. Relevance (an output quality component)
3. Accuracy (an output quality component)
4. Timeliness and punctuality (output quality components)
5. Accessibility and clarity (output quality components)
6. Coherence and comparability (output quality components)
7. Trade-offs between output quality components
8. Assessment of user needs and perceptions (covering all aspects of output quality)
9. Performance, cost and respondent burden (process quality components)
10. Confidentiality, transparency and security (process quality components)
80
See ESS Standard for Quality Reports: 2009 edition, Eurostat Methodologies and Working Papers (Luxembourg,
Office for Official Publications of the European Communities, 2009).
81 See footnote 70.
105
11. Conclusions (summary of principal quality problems and proposed improvements)
9.27. ESS standard quality reports. The ESS standard quality reports are producer-oriented, as
they have been primarily designed to assist EU member States in internal self-assessment and
reporting to Eurostat. Nevertheless, as considerable emphasis is put on output quality, they
include as well all the information necessary for user-oriented quality reporting.
2. User-oriented quality reports: contents and examples
9.28. Characteristics. User-oriented quality reports are keeping users informed about the
methodology of the statistical process and the quality of statistical output. Many statistical
agencies have adopted principles and standards for data quality and a data quality assessment
framework which outlines the different dimensions of quality and their measurement. The
quality assessment framework provides a general layout for the quality report; however, not all
dimensions are equally relevant for users. User-oriented quality reports are often provided on an
on-going basis as part of the metadata provided to users, and are updated regularly.
9.29. Quality report of Germany.82
The quality report for the foreign trade statistics of
Germany consists of (a) general information about the statistics, such as name of statistics,
reporting period, subject, respondents, legal framework and confidentiality; (b) purpose, as
defined by data variables, its justification and users; (c) compilation methods, describing how the
data are obtained and the burden on respondents; (d) accuracy describing coverage, customs and
statistical threshold and estimations and revisions; (e) timeliness; (f) comparability with data of
others and over time; (g) coherency, describing the relationship to related statistics; and (h)
references to additional information.
9.30. United States merchandise trade statistics quality report.83
The report entitled, ―U.S.
merchandise trade statistics: a quality profile‖ provides information on the quality of the
statistical program, and is intended to aid data users in their understanding and appropriate use of
the data. It addresses issues affecting the quality of statistics, and some known limitations. For
example, undocumented export shipments were identified through comparisons with trade data
of major trading partners, audits of trade documentation, and other measures. Implementing the
data exchange with Canada (see para. 9.47 below) and mandatory electronic filing (see para. 9.16
above) has reduced these errors and improved data coverage.
9.31. Eurostat merchandise trade statistics quality report. The report of Eurostat entitled
Quality Report on International Trade Statistics provides data users with quality indicators and
information regarding the practices of EU member States. It summarizes the main outcomes of
the national quality reports that member States must provide to Eurostat each year within a fixed
deadline. Its structure and contents follow the ESS guidelines for quality reports.
82
The information is derived from the following publication: ―Qualitaetsberich Aussenhandel‖ (Wiesbaden,
Germany, Statistisches Bundesamt, January 2011).
83 Washington, D.C., Bureau of the Census, Foreign Trade Division, Methods Research and Quality Assurance
Branch, 19 December 2002.
106
9.32. European Statistical System: Euro-SDMX Metadata Structure. Applicable within the
European Statistical System, the Euro SDMX Metadata Structure (ESMS) contains the
description of statistical metadata concepts for documenting statistical data and for assessing data
quality and the production process in general. With regard to its data quality components, the
ESMS follow quality criteria in line with the European Statistical Law: relevance, accuracy,
timeliness, punctuality, comparability, coherence, accessibility and clarity. Special attention is
given to a set of quality and performance indicators aiming at quantifying the various quality
criteria and at providing a common standard across the ESS. The ESMS documentation should
accompany data dissemination of Eurostat and the EU member States.
9.33. IMF SDDS on international merchandise trade.84
Countries that subscribe to the
International Monetary Fund (IMF) Special Data Dissemination Standard (SDDS) make a
commitment to observe the Standard and to provide information about their data and data
dissemination practices (metadata) on the IMF Dissemination Standards Bulletin Board (DSBB).
One of the areas covered by the IMF SDDS is international merchandise trade statistics. The
SDDS metadata are available in two presentations: the current SDDS format and the Data
Quality Assessment Framework (DQAF) format which covers six dimensions: 0. Prerequisites of
quality; 1. Assurances of integrity; 2. Methodological soundness; 3. Accuracy and reliability; 4.
Serviceability; 5. Accessibility. The SDDS was established to guide members that have, or that
might seek, access to international capital markets in the provision of their economic and
financial data to the public. To date, there have been 68 subscriptions to the SDDS.
3. Producer-oriented quality reports – contents and examples
9.34. Characteristics. Producer-oriented quality reports aim at identifying strengths and
weaknesses of the statistical process and lead to, or contain the definition of, quality
improvement actions. Producer-oriented quality reports can be either motivated by internal
interest or externally mandated. They can take the form of, for example, internal review,
benchmarking (comparison with others) and audits. By their nature, producer-oriented quality
reports are often produced for particular reasons, for example, to fulfill a specific external
requirement or to deal with specific issues or problems.
9.35. Individual assessment reports for EU member States.85
An assessment is prepared
annually by Eurostat for all EU member States based on their responses to a quality report, with
the overall goal of achieving quality improvements. The assessment is structured according to
the following quality dimensions: relevance, accuracy, timeliness and punctuality, accessibility
and clarity, comparability and coherence, some of which are further subdivided. Under each of
these dimensions, a set of items is listed along with the specification of their requirements. For
example, under accuracy–coverage, the item ―statistical threshold in value‖ should be below or
equal to 1,000 euros in value and 1,000 kilograms in net mass. If an item is a legal requirement,
it is evaluated according to a four-point rating scheme which ranges from 1 (―serious persistent
infringement‖) to 4 (―compliance‖). If an item refers to a recommendation, the assessment can
84
See http://dsbb.imf.org/Pages/SDDS/Home.aspx.
85 See European Commission and Eurostat, ―United Kingdom: 2009 Individual assessment report—final version‖.
107
be: A (―fully applied‖), B (―partially applied‖) or C (―not applied‖). Some items are not
evaluated if they are not, or not yet, requirements.
9.36. Mission reports of international and regional organizations. International or regional
organizations can be requested by countries to conduct an assessment of the statistical
programme in a particular area such as merchandise trade. Such requests have often the purpose
of creating guidance on and the impetus to address institutional or general data compilation
issues and will focus on the particular areas concerned. In other cases, assessments have been
conducted as a part of technical assistance activities which aim at the overall application of the
international recommendations for international merchandise trade statistics and accordingly
focus on these concerns. As regards the United Nations Statistics Divisions, such assessments
were always provided on the basis of the concepts and definitions for international merchandise
trade statistics. The updated recommendations (IMTS 2010) provide a much better basis for such
assessments than the previous recommendations, since, in contrast with the previous
recommendations, the entire data compilation process is covered.
4. Measuring data quality
9.37. Use of quality measures and indicators. The measurement of the quality of any statistical
data, including international merchandise trade statistics data, is not a simple task. Problems arise
from the difficulties involved in quantifying the levels of individual quality dimensions and in
aggregating the levels of all dimensions. Under these circumstances, deriving a single
quantitative measure of quality is not possible. In the absence of such a single measure, countries
are encouraged to use a system of quality measures and indicators (see IMTS 2010, para. 9.13).
9.38. Quality measures and indicators. Quality measures directly reflect a particular aspect of
quality. For example, the time lag from the end of the reference period to the release of
international merchandise trade statistics is a direct quality measure. However, in practice, the
calculation of quality measures can be difficult or costly. Instead, quality indicators may be used
for the quality assessment. Quality indicators provide summarized quantitative or qualitative
evidence of the quality of the data. They are generally defined with respect to some reference
point and can assist in making different types of comparisons (ibid., paras. 9.14-9.15).
9.39. Methods and tools for measuring data quality. Methods for measuring quality encompass
documentation and reporting, the calculation of indicators, auditing procedures, self-assessment
and questioning the users. The Eurostat “Handbook on data quality assessment methods and
tools”86
aims at facilitating a systematic implementation of data quality assessment in the
European Statistical System. It presents the most important assessment methods: quality reports,
quality indicators, measurement of process variables, user surveys, self-assessment and auditing,
as well as the approaches of labelling and certification. The Handbook provides a concise
description of the data quality assessment methods currently in use. Furthermore, it offers
recommendations on how these methods and tools should be implemented and how they should
reasonably be combined. The methods and tools presented in the handbook facilitate an
assessment of statistical products, and statistics production processes, as well as the user
86
Manfred Ehling and Thomas Körner, eds. (Wiesbaden, Germany, European Commission, 2007)
108
perception of statistical products. Annex A of the handbook includes a background paper on the
position of data quality assessment in the general framework of quality management and annex B
presents examples of good practice in greater detail. The Handbook is primarily targeted towards
quality managers.
9.40. Information on quality measurement: United Kingdom of Great Britain and Northern
Ireland. The following metadata on quality are provided to users of United Kingdom trade
statistics: (a) quality standards against which the quality is measured and (b) Assessment
(including self-assessment) against some of these quality standards, including (i) quantitative
assessment against indicators for the six output quality dimensions, (ii) qualitative assessment of
own methods and adherence to EU legislation and (iii) channels for and results of post-
publication quality assurance.
C. Reconciliation studies, cross-country comparability and bilateral data exchanges
9.41. Goals of bilateral reconciliation studies. Often, it is assumed that exports of country A to
country B should be equal to imports of country B from country A. This, however, is rarely the
case. Reconciliation studies aim towards explaining these discrepancies between the bilateral
imports and exports statistics of trading partners, i.e., by identifying conceptual and
methodological differences in their respective types of data collection. However, even if both
countries compile their data using the same methodological principles and international
guidelines, their bilateral merchandise trade data will usually not match owing to multiple factors
(see para. 9.46 below). The purpose of a reconciliation study may be limited to the identification
of major differences in the statistics of two countries and the results will help each partner to
better understand the bilateral trade flows. However, the reconciliation process may reveal
systematic measurement errors and gaps, which should be corrected. Therefore, the goal of
reconciliations studies might include assessing the causes of differences and making adjustments
to various data components. Another, even more ambitious objective could be the harmonization
of the conceptual framework of the two sets of statistics, which could lead to the revision of
certain procedures and definitions and, in some cases, could suggest the use of alternative data
sources, all of which is expected to improve the overall quality of foreign trade data. At the
policy level, a reconciliation exercise will yield a common perception of the facts and can thus
facilitate the development of bilateral economic negotiations and international cooperation.
9.42. Limitations of the reconciled data. Reconciliation studies might entail the creation of a
reconciled data set. However, the reconciled data do not reflect any changes in the officially
published trade figures of either partner country. Reconciliation adjustments normally include a
series of estimates, which are not sufficiently precise to permit modifications to officially
published data. For example, many countries‘ import data are valued on a CIF-type basis, that is,
including insurance and freight charges, which must be removed during reconciliation, since the
partner country‘s exports are usually valued on an FOB-type basis; however, estimates of
insurance and freight charges are usually derived indirectly and do not necessarily reflect their
true amount.
9.43. Basic procedures for bilateral reconciliation studies. In general, reconciliation may
include the following activities: (a) setting the objectives for the project and reaching agreement
109
on the basic procedures; (b) establishing a common conceptual framework for reconciliation
purposes; (c) converting officially published data to the common framework; (d) examining the
differences in data and methodology; (e) making necessary data adjustments to achieve mutually
agreed sets of trade figures; and (f) formulation of conclusions of the reconciliation study. An
individual study could be limited to the activities described in (a), (b) and (c) above. It is advised
that a reconciliation study cover trade for at least a full year, and that a reconciliation table
(which identifies all the additions and subtractions that need to be performed in order for the
trade data of one partner to correspond to the trade data reported by the other) be prepared as one
of the outputs.
9.44. Cooperation between trading partners. The success of reconciliation is dependent on the
full cooperation of trading partners from the very beginning and on clear identification of
procedures to be followed at all stages of the process, from the initial exchange of the required
information to the mutual agreement on the final results. The agencies conducting the
reconciliation study should examine not only the various organizational aspects of the proposed
study but also its legal implications (for example, in certain cases, an exchange of data at the
level of transactions may involve the issue of confidentiality). At the beginning of a
reconciliation exercise, both parties have to agree on which data should be used as the
benchmark for a specific category of goods. For example, in the past, import data were normally
used as a benchmark for the comparison of most commodities. Import data were, in general,
considered to be of better quality than export data because imports are reported in sufficient
detail to allow customs to apply duties, taxes or other regulatory controls. However, for certain
commodities and in some countries, export data were viewed as being more accurate for the
same reasons.
9.45. A common conceptual framework and conversion of data to that framework. Establishing
the common conceptual framework involves an exchange and comparison of methodologies and
compiling practices, and adoption of the same definitions and classifications for use in the
reconciliation study. Issues to be considered are, among others: what are the major conceptual
differences; whether information is available on a country of origin/last known destination or on
some other basis; whether there are significant differences in compilation procedures (such as
suppression of confidential or low-value trade) which will affect bilateral comparability; and
whether there are certain transactions (such as processing trade) for which streamlined reporting
provisions exist that could affect comparability. The common framework serves as a practical
working tool with which to facilitate comparison of data between the two countries: it does not
replace official methodologies of the countries involved. The partners must also decide on such
issues as the working currency for the study, and whether currency conversion should be carried
out on a monthly or an annual basis (if exchange rates are fluctuating significantly, annual
conversion could create additional discrepancies).
9.46. Reasons for differences in data. Even where both partners fully comply with United
Nations guidelines for trade statistics, there can be differences between partner data. In fact,
some of the discrepancies are a direct result of following those guidelines. In order to identify
reasons of a conceptual nature for discrepancies, the following areas should be reviewed: (a)
coverage; (b) trade system applied; (c) time of recording; (d) interpretation and application of the
commodity classification; (e) valuation; (f) partner country attribution (i.e., in the case of indirect
110
trade or triangular trade);87
(g) confidentiality; and (h) other sources of discrepancy. The trading
partner attribution is considered, in terms of value, the most frequent and most important reason
for asymmetries, such as in the case of trade between the United States and China (see below for
details). Other common reasons for discrepancies in total trade and detailed trade level relate to
the valuation of goods (imports valued on a CIF-type basis and exports valued on a FOB-type
basis; treatment of taxes and duties, markups applied after export, currency conversion, etc.), the
timing of recording, coverage (trade system, different treatments of trade in special categories of
goods, thresholds, underreporting of transactions above threshold), classification and
confidentiality. Some of these differences are based on conceptual factors; however, many are
not. For a detailed discussion of these data items, please see annex IX.C.
9.47. Reconciliations studies: a few examples. The conduct of a bilateral reconciliation study
requires an agreement of the two partner countries which usually, would specify the responsible
agency and the other involved national agencies, the purpose, the scope, the years covered, the
methodology used and any other arrangements that are required for the conduct of the study,
such as the sharing of data and information. Reconciliation studies are conducted by many
countries88
and a few examples are provided below:89
The experience of Canada-Mexico-United States: The reconciliation studies between
Canada and Mexico, and between Mexico and the United States, allowed the sources of
significant differences in the 1996 and 1997 official trade statistics to be identified. The
studies have been useful to the three countries involved in evaluating their trade statistics
and identifying areas for further improvement.90
United States and China: Both countries established a statistical working group to
examine bilateral merchandise trade owing to the unusually large and growing statistical
discrepancies in their respective officially published data. The working group examined
the years 2000, 2004 and 2006, focusing on trade flows from China to the United States
owing to the larger discrepancies in that direction. The distinction was made between
trade moving directly from China to the United States, and trade moving indirectly
through intermediary countries. The working group identified factors that explained the
majority of the bilateral statistical discrepancies.91
87
The term ―indirect trade‖ refers to the situation when exports of country A are sent to country B, from which the
goods are re-exported to country C. The term ―triangular trade‖ is usually used to refer to the case of trade within the
European Union where goods are sold by a company in member State A to a company in member State B, which in
turn sells them to a company in member State C, although the goods are physically moved only once, from A to C.
In such cases, there is the risk that B will be recorded as partner country, or that B itself will report a trade
transaction.
88 Almost half of the countries that responded to a 2006 survey carried out by the United Nations Statistics Division
indicated that they had conducted or were planning to conduct bilateral or multilateral reconciliation studies with
their trading partners (see http://unstats.un.org/unsd/tradereport/introduction_MM.asp).
89 The United Nations Statistics Division plans to establish a reference website for materials on the topic of
reconciliation.
90 See International Merchandise Trade Statistics: Compilers Manual (United Nations publication, Sales No.
E.02.XVII.17), part I, annex D.4.
91 See Department of Commerce and Office of the United States Trade Representative, United States of America,
and Ministry of Commerce, People‘s Republic of China, ―Report on the statistical discrepancy of merchandise trade
between the United States and China‖, October 2009. For examples of additional research that has been conducted,
111
Sweden and Denmark: asymmetry exchange project. The goal of this project was to
reduce the asymmetries in the trade data of both countries. The available documentation
provides useful information on how to conduct such a project (e.g., it includes the draft
agreement between Statistics Sweden and Statistics Denmark) and illustrates the
problems that arise from concerns over confidentiality, which is in itself a major
contributor to asymmetries on the disaggregated commodity level. The work on
asymmetries at Statistics Sweden entailed examination of data at the enterprise level.92
European Union: Asymmetries in the intra-European Union trade flows. Eurostat,
together with the member States of the European Union, has been undertaking major
efforts in examining asymmetries in the intra-EU trade flows. Reconciliation exercises
are carried out with the aim of identifying the causes of asymmetry and to reconcile the
mirror figures wherever possible.93
Brazil. In Brazil, the statistical harmonization (reconciliation) of trade data has two
objectives: (a) to improve the quality of statistical data for national purposes and (b) to
submit to the trade negotiators figures that are accepted by both countries. For further
details, see annex IX.D.
9.48. Cross-country comparability. The issue of cross-country comparability, i.e., whether the
data on exports of one country is comparable with the data on exports of other countries
represents an important quality dimension and the main objective of international
recommendations. Cross-country comparability is the basic working assumption when
comparing data from two or more countries and depends on the extent to which the international
concepts and definitions for international merchandise trade statistics are applied by countries,
and on the impact of the various deviations on the data. The United Nations Statistics Division
has conducted multiple studies in which countries were asked about their compliance with the
international recommendations.94
IMTS 2010 (para. 9.23 (a)), recommends that countries
provide in their metadata information on their practices and on any deviations from the
international standards.
9.49. Bilateral data exchange: example of the United States and Canada. As an outcome of
bilateral reconciliation studies between the United States and Canada, both countries agreed to
derive their exports statistics from the partner country‘s statistics on imports. The agreement was
implemented January 1990, and each country consequently eliminated the requirement of filing
export documents for goods destined to the other. Under the agreement to exchange data, the
reporting burden on exporters is greatly reduced and data quality is improved. From the
perspective of the United States, this eliminated undocumented shipments to Canada, increased
see Zhi Wang, Mark Gehlhar and Shunli Yao, ―Reconciling trade statistics from China, Hong Kong and their major
trading partners: a mathematical programming approach‖, GTAP Technical Paper No. 27 (Weif Lafayette, Indiana,
Center for Global Trade Analysis, Purdue University, September 2007).
92 See Establish an Asymmetry Exchange Project between Sweden and Denmark, Background Facts: Economic
Statistics 2008: 10 (Stockholm, Statistics Sweden, 2008).
93 See Eurostat, Quality Report on International Trade Statistics, 2010 ed., Eurostat Methodologies and Working
Papers (Luxembourg, European Union, 2010), pp.26-27. Available from http://epp.eurostat.ec.europea.eu/cache/
ITY_OFFPUB/KS-RA-10-026-EN/KS-RA-10-026-EN.PDF.
94 The results are available from the UNSD website, at http://unstats.un.org/unsd/tradereport/introduction_MM.asp.
112
the accuracy of the data, and increased inclusion of data in the correct statistical month.
However, since the data exchange was implemented when both partners primarily used paper
export declarations, the benefits may now be relatively less significant, as the capability of
collecting export declarations electronically has improved.
9.50. Additional challenges. Although in general they do not outweigh the benefits, there are
additional challenges stemming from the data exchange between the United States and Canada.
One such challenge is the increased response burden on importers, as they have to report
additional data elements to meet the exporting partner's needs. When it is not possible to collect
these additional data elements, one partner country or both may have a gap in data. For example,
Canada does not collect containerization information on imports from the United States; hence,
containerized value and shipping weights are excluded from United States data on exports to
Canada. Further, the case of trade transiting one partner en route from the other to a third country
has not been handled well through data exchange. This leads to possible errors in coverage and
in attribution of country of destination. These and other problems have been identified and
efforts are made to measure them and minimize their impact on statistics. A joint report prepared
by the United States Census Bureau and Statistics Canada which discusses the effects of the data
exchange has been made available by both agencies.
D. Inter-agency collaboration on data quality
9.51. World Trade Organization Common Data Set.95
The Common Data Set (CDS)
constitutes a joint effort by Eurostat, Organization for Economic Cooperation and Development
(OECD), UNSD, UNCTAD and the World Trade Organization to reconcile their time series on
merchandise trade statistics, using international standards as a benchmark. Each agency is in
charge of supplying figures for a predefined set of reporting economies. Reconciliations,
coordinated by the WTO, consist of scrutinizing significant differences between the agencies'
data to determine the best value. In many instances, this results in finding an agreement on
substitution of values, with the objective for each participating agency being to review and
correct its own data. The CDS database, which gives access to statistics and documentation on
both officially reported and reconciled series, covers annual total merchandise export and import
values of over 200 economies, whose series are updated annually and presented back to the year
1995.96
9.52. Cooperation on methodology, data compilation and dissemination. The international
organizations active in the area of merchandise trade statistics are part of the Task Force on
International Merchandise Trade Statistics (TF-IMTS) in which issues and developments on
methodology and databases, including quality issues and the use of SDMX, are discussed on a
regular basis. Members of the Task Force regularly participate in the Expert-Group on
International Merchandise Trade Statistics which assists UNSD in the update of the international
recommendations and this Manual. OECD and UNSD implemented the coordinated collection of
annual data which avoids duplication of efforts and ensures that both organizations use exactly
95
See http://imts.wto.org/common_dataset_e.htm.
96 See para. 10.14 for an additional example on the harmonization of trade statistics within the Association of South
East Asian Nations (ASEAN) region.
113
the same data for OECD countries. Indeed, both organizations went much further: they agreed on
processing standards for annual trade statistics and implemented a joint processing system. All
international organizations have full access to the UNSD UN Comtrade database, which allows
the use of exactly the same data by all organizations and fosters a continuing commitment by
international organizations to ensuring that highest quality standards are followed and that the
issues that arise are addressed.
114
Annex IX.A.
Statistical data validation system of Brazil (example for exports)
9.A.1. The statistical validation system for Brazil‘s exports is applied in three different
contexts: (a) at date of entry (through dialogue) before the export register (declaration) has been
actually produced (preventive validation) (b) continuously, during the operations ( involving
export registers with significant values and other criteria) and (c) posteriori (post-validation),
after the export operations have been completed.
1. Preventive validation
9.A.2. The ultimate goal of the system is to validate specific fields of the export record that are
of statistical concern, in order to achieve the highest possible level of accuracy in Brazil‘s
statistics of foreign trade. To reach this goal, the system sets parameters for FOB-type unit
values (both in kilograms and in supplementary quantity units) of the Southern Common Market
(MERCOSUR) Common Nomenclature (NCM) codes. These parameters are set using data for at
least six months and a statistical model that: (a) takes into account the number of observations,
(b) eliminates peak and bottom distortions, (c) establishes middle values (by kilogram and
supplementary quantity unit), (d) establishes the standard deviation and maximum and minimum
quantity thresholds (by kilogram and supplementary quantity unit) and (e) creates a table of
parameters by commodity (NCM and HS code).
9.A.3. The FOB-type value in United States dollars, the net weight in kilograms and the
supplementary quantity are used to calculate the average value. In order to avert a slowing down
of operations or the creation of difficulties for the exporter, there is a tolerance for minimum and
maximum values of one decimal (-90 per cent and +900 per cent). If the operation is within these
margins, the exporter is informed that there may be an error, but the operation is not stopped.
Outside these margins, however, the export record is forwarded (centralized) for analysis to the
appropriate department in the Secretariat of Foreign Trade (SECEX). The Secretariat can
communicate through the system with the exporter, who then needs to ratify or justify the data
presented in his Export Register.
9.A.4. When the exporter enters data into Brazil‘s Integrated System of Foreign Trade
(SISCOMEX), the system analyses and compares them to the middle value by commodity. This
preventive validation stage leads to various possible scenarios, as illustrated in box A9.1.
9.A.5. Most of the reasons for forwarding (centralizing) an export record for statistical
analysis involve errors in the following information: (a) FOB value in United States dollars, (b)
net weight (in kilograms), (c) supplementary quantity, (d) commodity code (NCM–HS) or, (e)
currency unit or, (f) the INCOTERMS rule applied. The centralized review of export records
constitutes approximately 1 per cent of 20,000 daily operations for exports. More than 99 per
cent of these centralized records have typing errors.
115
Box IX.A.1
Detailed operation of SISCOMEX
Between the minimum and maximum parameters for the specific merchandise: operation pass
through.
Outside the minimum and maximum parameters for the specific merchandise, BUT within the
tolerance margin: the system informs the exporter about the possibility of error, allowing him to
rectify or confirm the information. If he confirms it, the operation proceeds regularly and the
export register is flagged for posterior analysis.
Outside the minimum and maximum parameters for the specific merchandise AND outside of
the tolerance margin: the export register is centralized in the Secretariat of Foreign Trade
(SECEX) for analysis within 24 hours. If it has errors, the exporter receives a message by system
containing the instructions for rectifying them.
The exporter may receive the following alert codes:
(a) M95 (inside tolerance – posterior analysis) or R95 (previous analysis): occurrence of
low price related to quantity. Quantity may be higher than correct or value may be lower than
correct;
(b) M96 (inside tolerance – posterior analysis) or R96 (previous analysis): occurrence of
high price related to quantity. Quantity may be lower than correct or value may be higher than
correct;
116
(c) M97 (inside tolerance – posterior analysis) or R97 (previous analysis): occurrence of
low price related to net weight. Net weight may be higher than correct or value may be lower
than correct;
(d) M98 (inside tolerance – posterior analysis) or R98 (previous analysis): occurrence of
high price related to net weight. Net weight may be lower than correct or value may be higher
than correct;
(e) M99 (posterior analysis only): operations with FOB value over one million dollars
which receive check and confirmation of values.
Box IX.A.2
Operation of the centralized review of export records
The basic methodology is comparative. Most errors occur when the fields of value and quantity
(net weight and supplementary quantity) are filled in with the wrong shift of the decimal point,
provided, in most cases, by the United States punctuation criteria adopted by the Central Bank of
Brazil (decimal point, comma for separating thousands).
The following fields should be checked in sequence:
(a) Framework: the identification of the administrative procedures on exports, especially
those with very low average price, such as operations on used material, contributes to the
solution in some cases.
(b) Incoterms: the most used INCOTERMS rule in exports is free on board (FOB). When
this is not the case, it can mean either a higher or a lower price. In any case, the system reports
the value and unit price at the loading place.
(c) Value (place of shipment and/or operation): this problem may be due mostly to typing
(decimal).
(d) Currency code: incorrect reporting can occur. For example, for an export to Italy, all
values are in euros and the exporter used the dollar code.
(e) Classification of goods (NCM = MERCOSUR Common Nomenclature, composed of the
HS six-digit codes plus two additional digits): some cases involve by the wrong classification of
the product, i.e., all information is correct, but the NCM code was entered incorrectly. As the
parameter table is directly related to the NCM, the analysis ends up being made for a product
other than the one the exporter wishes to export.
(f) Net weight in kilograms: the field net weight in kilograms is responsible for most errors,
caused by the misplacement of the decimal point. In some cases, the exporter repeats the same
number as that for quantity, although sometimes it is not equal to the net weight in kilograms.
(g) Supplementary quantity: for most of the NCM commodities, this field does not require
completion as the supplementary unit is kilograms. The error that occurs with some frequency is
the same as that for net weight, i.e., a typing error caused by moving the decimal place or
repetition of the same entry as that for net weight when the supplementary quantity is different.
2. Continuous and post-validation
9.A.6. Continuous validation is executed using management reports, which cover the main
daily operations. It is based on the ―significant value principle‖ and the use of comparative
statistics.
117
9.A.7. Post-validation is executed after the conclusion of the export operation (shipment),
based on validation reports entailing, e.g.:
(a) Comparison between net weight and value;
(b) Checking of the relation between merchandise by country for past periods;
(c) Analysis of the export registers flagged by yellow and red occurrences.
Annex IX.B.
Automated System for Customs Data (ASYCUDA) data quality assurance, measurement
and reporting: controls and reports
1. Existence controls
9.B.1. This type of controls checks whether the data element that has been declared as
mandatory is really entered. A data element can be declared as mandatory by programming or
through the configuration module. The configuration module allows the ASYCUDA user
countries to adapt the data capture of any document to their specific requirements and
circumstances (e.g., a data element could be declared as mandatory in country A and prohibited
in country B).
2. Data Format controls
9.B.2. This type of controls verifies that the format of the entered data element corresponds to
the format that has been declared during the implementation (e.g., the data element must be a
numeric with three decimals, or a date format). ASYCUDA supports various data formats (or
data types): numeric (with or without decimals), characters and date.
3. Referential and validity controls
9.B.3. This type of controls verifies whether the data element is correct according to the
reference table to which it is related. This means that the data element must exist in the reference
table and is valid for the respective time period (date of validity). A simple example is the list of
(partner) countries, which also includes its validity.
9.B.4. There are more than 40 reference tables on, for example (this list is not exhaustive):
importers or exporters, declarants, countries, customs procedure codes, terms of delivery
(INCOTERMS), places of loading/discharge, terms of payments, mode of transport, etc.
9.B.5. The customs integrated tariff consists in a specific and complex reference table
allowing the checking of the customs commodity code and other related elements (e.g., quantity
units associated with a specific tariff).
118
4. Consistency controls
9.B.6. This validation ensures that:
(a) The use of several data elements is consistent, depending on the content of one or more
control tables. This means that a specific data element must be valid not only per se (as indicated
in the above para.) but also in combination with one data element controlled in another table
(e.g., not only must the mode of transport at the border exist in the table of the modes of
transport but it must also be authorized for the declared customs office of entry/exit);
(b) The existence of a specific data element depends on the value of the other data element
(e.g., the quantity unit ―number of items‖ is not mandatory in all cases but if requested by the
tariff commodity code then it becomes mandatory).
5. ASYCUDA statistical reports
9.B.7. In addition to the checks explained above, which are mainly performed during data entry,
ASYCUDA also provides a statistical reporting module. These reports are intended to provide a
summary or overview in a specific time period; however, they can also be used for validation
purposes. Box IX.B.1 provides an example of a summary report by commodity.
Box IX.B.1
Summary report by commodity
Commodity
code
Import Export
Quantity
(in
kilograms)
CIF value
(national
currency)
Number
of
statistical
units
Quantity
(in
kilograms)
FOB value
(national
currency)
Number
of
statistical
units
119
Annex IX.C.
Data reconciliation: reasons for differences and further guidance
9.C.1. Coverage. Specific goods or types of transactions may be defined differently by trading
partners, and may be included in the trade statistics by one partner but excluded by the other
(e.g., leased goods, military goods, goods imported or exported for or after repair). Further,
countries usually have different provisions for the treatment of low-value shipments, which may
be excluded from statistics, reported in less detail, or estimated instead of being compiled.
9.C.2. Trade systems. If one partner uses the special system of trade and the other uses the
general system, goods moving between premises for customs warehousing and customs free
zones of those countries will not be accounted for by the country using the special system.
Where both countries use the special system of trade, goods moving between customs free zones
will not be recorded by either country and will not affect their export and import totals. To
facilitate reconciliation, countries should clearly define their statistical territories, specifying any
particular inclusions and exclusions. For example, Puerto Rico and the United States Virgin
Islands are part of the statistical territory of the United States; therefore, exports to/imports from
those territories should be recorded as trade with the United States in any reconciliation study
involving the United States.
9.C.3. Timing of recording. Many factors contribute to timing differences, including the time
needed for the transportation from the exporting to the importing country, the time needed for the
completion of the customs procedures and warehousing operations. Further, the filing and
recording of various documents at different stages and their statistical recording might follow
different practices. For example, in one country, a trade flow may be attributed to the time period
in which the invoice is received in the importing country, while another country may attribute the
transaction to the time period in which the amounts owed to the customs administration are paid.
Also, the deadline for reporting statistical information, the use of summary reporting, the
definition of the reporting period and the procedures for handling late or incorrect records might
be different in countries and therefore affect the time of recording. Such timing differences can
be significant, particularly in the case of monthly data or where the level of trade in a given
commodity has changed extensively (so that effects of timing differences between the study
period and the preceding and succeeding periods are not equivalent).
9.C.4. Interpretation and application of the commodity classification. All trading countries
have adopted the Harmonized System (HS) for commodity classification. Despite that significant
achievement, there are differences in interpreting and applying the HS, both within the same
country and among different countries. In order to reconcile trade in particular commodities, an
analysis of uniformity of the HS application might be required. Differences and errors in
classification normally affect only the distribution of the goods among different classes;
however, they may sometimes lead to differences in total trade, which would be the case, for
example, if different recording thresholds were applied to different commodities.
120
9.C.5. Valuation. IMTS 2010 (para 4.4) recommends that countries adopt the World Trade
Organization Agreement on Customs Valuationa as the basis for valuation of their international
merchandise trade for statistical purposes (whether the country is a World Trade Organization
member or not) for both imports and exports. Further, it is recommended that imports be
recorded on a CIF-type basis and exports on a FOB-type basis. Therefore, CIF imports would
exceed the counterpart export value by the value of international insurance and freight charges
even if there were no other sources of difference. Where such charges have been included, a
negative adjustment is made to remove them, for comparison with FOB export values. If the
actual freight charges are not known, estimates may be derived from unit value differences or
through other approaches, such as the application of general CIF/FOB ratios. The determination
of the customs value of imported goods is regulated by the WTO Agreement on Customs
Valuation.
9.C.6. However, there can be a multiplicity of other reasons for valuation differences,
including undetected under and over-declaration of values, different value estimates for
transactions without valuation such as charitable/relief shipments, barter trade or related party
transactions and different views on the exclusion or inclusions of services. In all of these cases,
compensating adjustments are needed if the differences are significant.
9.C.7. Currency conversion. Currency conversion practices for goods invoiced in foreign
currencies may also cause discrepancies between one country‘s import value and the counterpart
export value, particularly when the exchange rate between the partners fluctuates rapidly.
Further, the procedures used in the reconciliation for expressing both sets of statistics in the same
currency for comparison purposes can also create discrepancies.
9.C.8. Partner-country attribution. It is recommended that imports be attributed to the country
of origin and exports to the country of last known destination (see IMTS 2010, para. 6.25). This
partner-country attribution can explain many differences between the statistics of trading
partners in cases when goods move from the country of origin to the country of destination
through third countries. For example, in the case where goods are produced in country A, sold
and shipped to country B and afterwards resold and dispatched to country C, the trade statistics
of country B will show exports to country C, but the statistics of country C will not attribute its
imports to country B: they will indicate that goods were imported from country A.
9.C.9. Different application of rules of origin. If countries have different rules of origin, the
trade flows will also be recorded differently. Consider the following example. Goods are
produced in country C, imported by country A, undergo certain processing and are exported to
country B. If countries A and B have different rules of origin, the processed goods dispatched
from country A to country B may be considered (in country A) as a domestic export to country B
but as an import from country C in country B (if the rules of origin adopted by country B do not
recognize the processing in country A as origin-conferring). This example illustrates the
necessity of developing harmonized rules of origin.
a See Legal Instruments Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at
Marrakesh on 15 April 1994 (GATT secretariat publication, Sales No. GATT/1994-7).
121
9.C.10. Partner attribution in the case of re-exports and re-imports. Consider the case of goods
originating in country A, exported, and returning to country A from country B without having
been substantially transformed while abroad. Some countries record such goods as re-imports
from country B, while others treat them as imports from themselves, following the recording of
country of origin. In the latter case, there would be a discrepancy between exports of country B
to country A, which would include those goods, and imports of country A from country B, which
would not.
9.C.11. “Through trade” operations. With the lowering of tariffs, ―through trade‖ operations
are increasingly taking place. Consider the following example. Goods are exported from country
A to country B but are shipped through country C. Instead of being declared in transit, they are
declared for home use in country C and then re-exported to country B. If the exporter in country
A has properly reported the country of final destination (country B), such a practice will create a
discrepancy between the export data of country A and the import data of country C, as well as
between the export data of country C and the import data of country B. As more and more tariffs
are reduced or eliminated, this reason for discrepancy in trade statistics is likely to increase.
9.C.12. Unknown final destination. In some cases, the country of destination may not be known
at the time of export. For some products shipped by vessel, such as petroleum and some
chemicals, the ship may sail before the goods are sold and be directed to the final destination en
route. In reconciliation, those kinds of transactions should be identified and attributed to the
appropriate partner country.
9.C.13. Confidentiality. The application of confidentiality on partner or commodity level
automatically generates reporting asymmetries, which should be taken into account during
reconciliation studies.
9.C.14. Other sources of discrepancy. A considerable discrepancy between import and export
statistics may arise if the information on imports is more complete than the information on
exports. Differences in data-collection procedures may also contribute noticeably to data
divergences (e.g., export statistics compiled using sampling techniques might be quite different
from imports data derived from customs records). Reporting errors may in some instances
seriously affect the comparability of data sets as well. Another source of discrepancies can be
simplified reporting, under which not all data items are provided.
9.C.15. Adjustments to data to achieve mutually agreed sets of trade figures. The preparation of
analytical tabulations comparing import and export data for various groupings and at various
levels of details helps to identify and assess the disparities. Once the analytical tables are
completed, a series of adjustments may be applied (usually either based on supplementary
information or derived by a series of estimates) to align data as closely as possible.b Depending
b There are three broad categories of adjustment: (a) systematic adjustments affecting all products in a detectable
way, e.g., inclusion of the cost of freight and insurance, and differences in timing; (b) known adjustments, which
may affect only selected commodities in cases where countries record imports of special commodities separately and
do not include them in regular official statistics (e.g., for trade in military aircraft); and (c) irregular adjustments,
that is, adjustments that may change over time (e.g., coding and processing errors).
122
on the reconciliation methodology and the procedures agreed upon, adjustments are applied at
either the high-level aggregates or detailed product level. Adjustments at the high-level
aggregates level include adjustments for differences in commodity coverage and trade system
definition, varying procedures of valuation, insurance and freight, and timing; and under-
reporting, country definition, indirect trade, re-exports and re-imports. In some cases, it may be
necessary to investigate discrepancies in transaction-level data and make use of information
supplied by declarants, trade associations and other government agencies or obtained by means
of special investigations. Classification adjustments may also be applicable, especially if items
shown in chapters 98 and 99 of the HS are not included in the total trade. In such cases, they
should be distributed at least to the chapter level and investigated for possible reclassification
and inclusion. There may be cases where discrepancies are identified but remain unresolved
because of the difficulty of establishing which data are more reliable for adjustment purposes
without expending unreasonable amounts of time and resources. Depending upon the
information available, it may or may not be possible to estimate the effect of every identified
difference and agree on an appropriate adjustment. Difficulties in the preparation of adjustments
may lead to further reconciliation activities, such as analysis of the differences at a more detailed
commodity level and calculation of the residual adjustment (referred to as ―other‖) by
subtracting the adjusted export value from the agreed upon adjusted import value.
9.C.16. Conclusions of the reconciliation study. The trading partners must decide at what point
to consider the study completed. They must also decide on how to present the results: whether to
compute a ―reconciled‖ value for each direction of trade or simply to present an explanation of
why the two data sets differ. The reconciliation study may conclude with a summary statement of
its major results and a set of annexes detailing specific findings. It is unlikely that all significant
discrepancies can be resolved. Although reconciliations between partner countries are usually
unique for each set of countries, common kinds of major adjustments have typically been applied
to arrive at reconciled trade flows.
123
Annex IX.D.
Conduct of reconciliation studies: the experience of Brazil
9.D.1. Reasons for divergences in bilateral trade. In the experience of Brazil, divergences in
bilateral trade statistics can be caused by differences in coverage, different methods for the
treatment of certain goods (e.g., military goods, ship‘s stores and confidential data), value
increases in intermediary countries, differences in the classification of goods, time lags in
reporting, differences in valuation, including CIF/FOB differences, currency conversion,
methods of partner-country attribution, and of trade through third country intermediaries.
Although such divergences may be substantially reduced by the adoption of the concepts and
definitions recommended in IMTS 2010, there are also divergences that may originate from
variations in data sources, reporting errors, errors in data collection or in the processing and
forwarding of results, the use of fraudulent documents or the inability of traders to furnish
accurate information. Therefore, a certain amount of non-comparability will remain.
9.D.2. Establishment of a working group on statistics harmonization. Brazil has participated in
several statistical harmonization groups within the framework of bilateral trade and investment
negotiations, with the aim of improving the quality of statistical data for national purposes and to
provide negotiators with trade figures that are accepted by both countries. In particular, statistical
harmonization aims to discover the causes of the numerous discrepancies and to recommend
corrective actions through the application of homogeneous and more compatible methodologies.
When trade negotiations start, Brazil proposes the establishment of a working group on statistics
harmonization, composed of specialists responsible for statistical production in both countries, in
order to enable the exchange of data and the analysis of existing divergences. In some cases,
Brazil also proposes the exchange of information on methods of data quality control and
dissemination
9.D.3. Meetings and tasks of the working group on statistics harmonization. Normally, more
than two meetings are necessary. In the first meeting, the experts from both countries establish
the work methodology and define the data to be exchanged for further bilateral analysis. This
meeting is also useful for the purpose of establishing agreement on the layout of the files,a the
agenda and the schedule for exchanging data, so that statistical harmonization between the two
countries may be achieved or so that the causes of differences may be identified and solutions
proposed to reduce them. In the second meeting, the focus is on the analysis of the flows that
present the biggest divergences. In the third meeting, the study concludes with the analysis of the
other flows and the preparation of a document by both countries containing their conclusions.
9.D.4. Data exchange. Initially, data are exchanged for the previous three years and the
available months of the current year. Later, the analysis is complemented by the remaining
monthly data at the greatest possible level of detail. To facilitate the exchange of data, the
a The files always include the following variables: Reporting country, trade flow (exports or imports), reference
year, reference month, partner country (last known country of destination for exports, country of origin for imports),
country of consignment (for imports only), commodity code (HS at the six- or eight-digit level), supplementary
quantity, supplementary quantity unit measurement code, net weight (in kilograms), FOB value (in United States
dollars), insurance (in United States dollars, only for imports) and freight (in United States dollars, only for imports).
124
Secretariat the Ministry of Development, Industry and Foreign Trade (MDIC/SECEX) creates
mechanisms for the electronic transfer of data in American Standard Code for Information
Interchange (ASCII) format according to an agreed layout through the File Transfer Protocol
(FTP), granting access to the representatives of the partner country to upload and download files.
After the initial exchange of files, each month‘s data are exchanged by the twentieth day of the
following month.
9.D.5. Characteristics of the work of the working groups on statistic harmonization. The work
of the working group on statistic harmonization may be characterized as follows:
(a) Confidential data are not exchanged. The data exchanged are used only for the purposes
of the working group on statistic harmonization and are not transferred to other entities or
government agencies. Further publication of these data requires the prior written consent of the
other party and an appropriate reference in the text of the publication;
(b) The parties exchange information on the methodology for processing adopted by each
country. The statistical reconciliation demands the adoption of the same methodologies for the
generation of data, with the exclusion of those aspects that, for operational reasons, cannot be
adopted by the parties;
(c) If both parties adopt IMTS 2010, the concepts and definitions that may have more than
one interpretation are prioritized for the bilateral analysis of data divergence. Indeed, some of the
discrepancies result from different uses of these recommendations, based on different
interpretations.
9.D.6. Steps to be taken during reconciliation. To identify data differences and their causes,
the working group on statistic harmonization usually follows the steps below:
Step 1 - An initial comparison is made at the two-digit (chapter) level of HS, considering always
more than one year.
Step 2 - After identifying the differences at the 2-digit level, the analysis is expanded to a greater
level of detail (the four-, six-, or, if possible, eight-digit level), even if there are
differences in the tables of commodity codes.
Step 3 - The working group then checks to determine whether the various differences within the
same positions at the four-digit or six-digit levels compensate each other, in which case
the problem would lie with the different classification of goods for the same group of
products. Further, the working group checks to determine whether differences in tariffs
may induce companies to classify products in codes that represent the payment of lower
duties.
Step 4 - The working group also checks to determine whether differences compensate each other
across years and months. In that case, the problem is the time of registration, mainly on
imports under the special trade system. Many factors may contribute to differences in
time of recording, including the characteristics of the products traded, time spent at port
of entry, distance between countries and type of transport, as well as different
administrative and customs procedures (see chap. XII for further details). The working
group evaluates the distance between the two countries, the predominant type of product
and the more frequently used type of transport. Averages of differences of about 4 per
cent are considered normal.
125
Step 5 - The working group examines the persistent divergences to determine whether they are in
terms of values or in terms of quantities. If the quantities are similar, there may be a
problem of undervaluation or overvaluation of goods which then becomes a fiscal
problem. In these specific cases, the working group checks the original records of each
country relating to the same operation. It is highly important that the technicians who are
undertaking the harmonization have unrestricted access to all the data of the operations
of export and import in sufficient detail to enable them to make a clear identification of
the cause of divergence. If the values are similar, but not the quantities, there may be
differences related to the unit of statistical quantity adopted by each country. The use of
different units for the same product generates significant distortions and is in most cases,
an important reason for differences of quantities. This arises frequently in the case of
errors in the classification of the same product.
Step 6 - Other factors to be considered by the working group are the effects of indirect trade and
the criteria adopted for the registration of the partner country. In general, the values and
quantities of imports where the partner country is not the country of origin must be
excluded from the analysis. For instance, when the partner country is a member of the
European Union, the ―Rotterdam effect‖ may cause significant divergences.
Step 7 - When the data that are compared do not have the same valuation, the working group
checks the characteristics of the goods sold and the average cost of freight and
insurance. Those factors mean, in some cases, differences of over 100 per cent in the
case of primary products (soybeans, iron ore, etc.). In average, the costs of freight and
insurance, representing the difference between FOB and CIF of industrialized products,
is between 8 and 10 per cent of the cost of goods. To conciliate them, it is necessary that
both countries make available import and export data on an FOB basis, at the finest level
of detail possible. In Brazil, the totality of foreign trade statistic is valued on an FOB
basis.
9.D.7. There are other sources of divergences, such as coverage, trade system and method of
currency conversion, which must be examined according to IMTS 2010. In this matter, special
attention is given to transactions in products like energy, on-board consumption, airplanes, ships,
etc., or to the case where countries have special customs regimes in their territory.
9.D.8. The most advanced working group study resulted in significant benefits in terms of the
quality of statistics produced in both countries. Some suggestions for correction are implemented
immediately by the authorities entrusted with statistical production, e.g., regarding issues related
to coverage and valuation. Other issues are of a fiscal nature—for example, differences in goods
classification and under-invoicing—and are not caused by methodological differences. In those
cases, reports are sent to customs agencies identifying all problems found for each item in the
customs nomenclature of the two countries, so that they can take appropriate action.
9.D.9. After the implementation of corrective measures, the data exchange and the statistical
monitoring of bilateral trade are continued.
127
Chapter X
Data compilation in a customs union
10.1. Introduction. The present chapter describes briefly the main types of existing customs
unions, concentrating on the implications for trade data collection and compilation. Practices in
organizing data collection in a customs union are discussed and attention is given to the
cooperation of the member States of customs unions in facilitating the timely compilation and
dissemination of comparable data on intra-union and extra-union trade. Further possibilities of
multi-country data exchanges are discussed. This chapter is linked, in particular, to chapter VII,
which discusses compilation of data from different sources, as well as to chapter IX, section C,
which contains information regarding reconciliation studies, cross-country comparability and
bilateral data exchanges.
A. Main types of customs unions and their implications for trade data compilers
1. European Union: custom unions as a single market
10.2. From a tariff union to a single market. The present European Union started in 1968 as a
tariff union which abolished all customs duties on trade between its member States. The new
export opportunities are credited with giving a boost to the economies of member States.
Between 1958 and 1972, intra-European Community trade increased by a factor of nine, leading
to market optimism and investment growth in the Community. However, free circulation of
goods within the Community was still not a reality. Numerous customs border formalities were
in existence. Before 1993, all trucks were still stopped at the internal Community borders for
clearance and inspection.
10.3. Single market. The European Union formally became a single market on 1 January 1993,
when the physical frontiers and almost all customs checks at the internal borders were removed
for the free movement of goods between member States. However, the abolishment of the
physical barriers for the free movement of goods (and persons) is only one aspect of the
establishment of a single market. Technical barriers, such as different product standards, etc, and
barriers related to taxation need to be addressed in order for a single market for goods and
services to be established. The single market of the European Union aims to establish and ensure
the four basic freedoms: free circulation of goods, persons, services and capital in a frontier-free
internal market.97
Box X.1
Definition of customs union, free trade zone and common marketa
A customs (or tariff) union is a trade agreement by which a group of countries charges a
common set of tariffs to the rest of the world while granting free trade among themselves. It is a
partial form of economic integration which constitutes an intermediate step between free-trade
zones (which allow mutual free trade but lack a common tariff system) and common (or single)
markets (which, in addition to the common tariffs, also allow free movement of resources such
97
For more information, please see Pascal Fontaine, Europe in 12 Lessons, October 2006, (Luxembourg, European
Union, 2010), chap. 6, entitled ―The Single Market‖. Available from http://europa.eu/abc/12lessons/index_en.htm.
128
as capital and labour between member countries). A free-trade zone with common tariffs is a
customs union. By virtue of the definition, a country cannot be a member of two customs unions.
Some trade agreements might be referred to as a customs union without complying with the
above definition. a See http://www.britannica.com/.
Box X.2
The WCO definition of customs union a
Customs union: Entity forming a Customs territory replacing two or more territories and having
in its ultimate state the following characteristics:
- a common Customs tariff and a common or harmonized Customs legislation for the application
of that tariff;
- the absence of any Customs duties and charges having equivalent effect in trade between the
countries forming the Customs Union in products originating entirely in those countries or in
products of other countries in respect of which import formalities have been complied with and
Customs duties and charges having equivalent effect have been levied or guaranteed and if they
have not benefited from a total or partial drawback of such duties and charges;
- the elimination of restrictive regulations of commerce within the Customs Union.
a See World Customs Organization, ―Glossary of international customs terms‖, (Brussels, October 2011).
10.4. Need for new data sources. The disappearance of customs records, a comprehensive and
very closely controlled source of information, made it necessary to implement new fiscal,
statistical and other systems to control or document goods crossing internal borders. This led also
to the creation of Intrastat98
- a specific data-collection system for intra-EU trade statistics.
10.5. Characteristics of Intrastat. From the outset, the main characteristics of the Intrastat
system have been:
(a) Direct collection of information from consignees and consignors of goods, who have to
send the relevant statistical authority a summary statement of transactions for each month;
(b) A close link with the value added tax (VAT) system relating to intra-EU trade; in
particular, the definition of providers of statistical information, the reference period and the value
in line with the VAT system allow verification of the completeness of the data collected and the
making of adjustments for non-reported trade;
(c) A maximum reduction of the workload of businesses by means of a system of exemption
or simplification thresholds.
10.6. Intrastat survey and the link with the VAT system. Intrastat is not the same as a typical
business survey in which data from a small fraction of the population of enterprises are collected.
98
It is necessary to make distinction between Intrastat and intra-EU trade statistics. Intrastat refers to a data-
collection system covering movements of Union goods between member States if such movements are not declared
on the customs declaration. Intra-EU trade statistics merge information from Intrastat declarations, customs
declarations and additional sources for specific movements and non-reported trade (estimation).
129
It is similar to a system based on administrative data, which collects nearly all relevant
observations. Only a minor part of trade (in terms of value) is not collected by Intrastat.
Specifically, member States have implemented a threshold system which spares intra-EU traders
from having report on their transactions or allows them to provide less detailed information on
condition that their total trade value does not exceed a certain amount during the previous or
present calendar year. To assure sufficient coverage the exemption threshold is set such that each
Member State has to guarantee that at least 97 per cent of the total value of a member State's
dispatches and 95 per cent of the total value of its arrivals (which are measured based on VAT
declarations) is directly collected. The remaining part is estimated on the basis of values declared
for fiscal purposes. The exempted 3-5 per cent in value represents about 70-80 per cent of VAT
registered traders in the European Union who trade between the member States.
10.7. About half a million companies in Europe are obliged to provide information on intra-EU
goods transactions. Each month, they have to declare, for statistical purposes, their goods
deliveries to and from other member States. The merchandise has to be specified according to a
commodity classification that contains about 10,000 codes (Combined Nomenclature), and for
each goods item the value and quantity information have to be provided. For all trade operators
involved, Intrastat meant a lighter workload compared with that of the previous system (before
1993, based on customs declaration), but the introduction of Intrastat made the statistical
reporting burden apparent. Therefore, Intrastat has been subject to significant efforts to decrease
the reporting burden for trade operators. A data set (eight data elements) that has been reduced,
compared with customs data, is now required for EU purposes; the threshold system was
expanded to exempt a larger number of enterprises; the number of nomenclature headings was
reduced; and several simplified reporting measures were introduced. In addition, EU and its
member States invested in the development of modern electronic data collection and validation
tools which facilitate considerably the reporting required for Intrastat.
10.8. Institutional arrangements and data harmonization. To ensure coordination in terms of
content, time and methods, the EU statistics relating to the trading of goods between member
States are based on EU legislation. However, according to the principle of subsidiarity, the
Intrastat legislation allows member States to choose, to a large extent, their method of
implementing Intrastat. The legislation is discussed with countries which have to provide their
information to Eurostat according to requirements that are also referred to as the EU or
community concept. The legislation also includes additional measures such as regular quality
reporting. Compilation and all other relevant issues are regularly discussed by Eurostat and
member States. Based on these discussions, Eurostat provides guidance on overall data
compilation and specific compilation issues to its member States.
10.9. Community versus national concept. In some instances, the EU concept diverges from the
international recommendations. However, many member States simultaneously compile their
data according to the so-called national concept which is usually more in line with the
international recommendations. The principal differences between the EU concept and national
concepts99
entail: (a) breakdown by partner country: for arrivals, certain member States record
the country of origin as the partner country, whereas the member State of consignment appears in
99
The differences are described from a European Union perspective, using EU concepts as reference.
130
the EU statistics relating to the same movements; (b) treatment of goods in transit: some member
States do not record goods, which they consider to be ―in transit‖ in their national figures. This
involves, first, imports from non-member countries that are cleared in these member States
before being dispatched to other member States and, second, goods from other member States
that are immediately re-exported to non-member countries. These flows are included in the EU
statistics under intra- or extra-EU trade, as appropriate. The phenomenon is sometimes referred
to as the ―Rotterdam effect‖;100
and (c) general trade: some member States compile extra-EU
trade statistics according to the general trade system, while the EU concept is based on special
trade (relax definition).101
10.10. Challenges of merchandise trade statistics in the European Union. Trade statisticians
within the European Union aim to gain additional information from existing data collections
without any additional burden on respondents, especially information relevant for the analyses of
globalization. This is a challenge, given the policy, designed to minimize at the same time the
burden on respondents. A major quality concern of the Intrastat system has been asymmetries in
partner reporting. Regarding the compilation of extra-EU trade, a main challenge is the
implementation of a modernized customs code which, among other things, would enable the
implementation of centralized customs clearance (see below for more details).
2. Customs unions of developing and transitional countries
10.11. Southern African Customs Union (SACU) .102
The members of customs union are
Botswana, Lesotho, Namibia, South Africa and Swaziland. The SACU Secretariat is located in
Windhoek, Namibia. SACU was established in 1910, making it the world‘s oldest customs
union. Historically, SACU was administered by South Africa, through the 1910 and 1969
Agreements. The customs union collected duties on local production and customs duties on
members‘ imports from outside SACU, and the resulting revenue was allocated to member
countries in quarterly instalments utilizing a revenue-sharing formula. Negotiations to reform the
1969 Agreement started in 1994, and a new agreement was signed in 2002. The new
arrangement was ratified by SACU Heads of State. The economic structure of the Union links
the member States by a single tariff with no customs duties between them. The member States
form a single customs territory in which tariffs and other barriers are eliminated on substantially
all the trade between the member States for products originating in these countries. There is a
common external tariff that applies to non-members of SACU.
10.12. Common Market for Eastern and Southern Africa (COMESA). The objective of the
cooperation in trade, customs and monetary affairs is to achieve a fully integrated, internationally
competitive and unified single economic space within which goods, services, capital and labour
100
See International Trade Merchandise Statistics: Supplement to the Compilers Manual (United Nations
Publication, Sales No. E. 08.XVII.9 and corrigendum), para. 6.41.
101 For more information, see Eurostat, Quality Report on International Trade Statistics, 2010 ed., Eurostat
Methodologies and Working Papers (Luxembourg, European Union, 2010).
102 For more information on SACU, see http://www.sacu.int/index.php.
131
are able to move freely across national frontiers.103
COMESA has a strong statistical programme
in support of these goals. The overall objectives of this programme are to harmonize and
improve the production of statistics and to improve capacities at both national and regional levels
to undertake trade policy impact assessments, with merchandise trade statistics as one of the
focal areas. A main activity of COMESA in respect of trade statistics is the installation and
support (including training) of the Eurotrace software, which has been installed in most member
States and is instrumental in data harmonization. COMESA also adopted rules and regulations
for compilation of international merchandise trade statistics in the COMESA region, which came
into force in 2010 and aim at the uniform application of the IMTS concepts and definitions as
contained in IMTS 2010.
10.13. Association of Southeast Asian Nations (ASEAN). The member countries of ASEAN
agreed to establish an ASEAN Community by 2015.104
One of the pillars is the ASEAN
Economic Community (AEC), which would entail the creation of a single market and production
base with a free flow of goods. However, free flow of goods would require not only zero tariffs
but the removal of non-tariff barriers as well. Another major component that would support the
free flow of goods are trade facilitation measures such as integrating customs procedures,
establishing the ASEAN single window, continuously enhancing the Common Effective
Preferential Tariffs (CEPT) Rules of Origin including its Operational Certification Procedures,
and harmonizing standards and conformance procedures.105
10.14. ASEAN harmonization of trade statistics.106
The above requirements led to activities for
the harmonization of trade statistics within ASEAN. An EU-ASEAN Statistical Capacity
Building (EASCAB) Programme will implement two pilot projects in 2011 and 2012: on IMTS
and Statistics on international trade in services/foreign direct investment statistics. The purpose
of the IMTS pilot project is twofold: to help implement a reliable and timely IMTS data
transmission, data production and data dissemination process at the ASEAN Secretariat, which
can be taken over and continued by ASEANS; and second, to enable the active data handling and
processing within the pilot project to help improve the quality of IMTS on the ASEAN level by
103
The following 19 countries are members of COMESA: Burundi, Comoros, Democratic Republic of the Congo,
Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan,
Swaziland, Uganda, Zambia and Zimbabwe. For more information on the goals and activities of COMESA, see
http://www.comesa.int/.
104 The following 10 countries are members of ASEAN: Brunei Darussalam, Cambodia, Indonesia, Lao People‘s
Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. For more information,
see http://www.asean.org/about_ASEAN.html.
105 See ASEAN Economic Community Blueprint, (Jakarta, ASEAN Secretariat, 2008) p. 6.
106 The ASEAN Framework of Cooperation in Statistics (AFCS) was adopted by the ASEAN heads of statistical
offices meeting administrations at a meeting held on 30 December 2010. The overall objective of Framework of
Cooperation is to strengthen the organizational framework and statistical capacity of ASEAN towards the
establishment of an ASEAN community statistical system (ACSS) by 2015. The mission of the ACSS would be to
provide relevant, timely and comparable ASEAN statistics in support of evidence-based policy and decision-
making and enhance the statistical capacity of member States and ASEAN Secretariat. In strengthening ASEAN
statistics, priority is given, inter alia, to development and harmonization in four areas of regional statistics: national
accounts, international merchandise trade (IMT), relevant components of international trade in services (ITS) and
foreign direct investment (FDI). See Strategic Plan for the Establishment of the ASEAN Community Statistical
System (ACSS) 2011 – 2015.
132
identifying methodological and other quality-related issues currently still preventing the proper
regional harmonization of data. As of October 2011, the technical assistance team had completed
the data checking, loading and processing of all 10 countries and produced publications with
results of the first and second quarter of 2010. It will finalize the publications of the results for
the third and fourth quarter by end of 2011. It has also started processing the Q1 and Q2 2011
data sets. The data comprise figures of the ASEAN member States covering trade within the
ASEAN region as well as with the rest of the world. The data has been processed according to
the ASEAN Harmonized Tariff Nomenclature (AHTN) commodity classification up to the detail
of eight digits to that extent that member States were able to provide such data. The model
publication will finally evolve into a quarterly periodical on ASEAN trade statistics, to be
published regularly by the ASEAN Secretariat. By 2012, the EASCAB technical assistance team
shall hand over the IMTS production process to the ASEANstats (see ―EASCAB Quarterly”).
10.15. Customs Union of Belarus, Kazakhstan and the Russian Federation. On 1 July 2011
Belarus, Kazakhstan and Russia lifted the customs controls existing between their countries as
part of their customs union agreement. This means that information on trade existing between the
member countries is no longer available from customs declarations and that additional sources of
data have to be used (see box X.3 for details).
Box X.3
Example of the Customs Union of Belarus, Kazakhstan and the Russian Federation
Belarus, Kazakhstan and the Russian Federation signed on 6 October 2007 a treaty establishment
of a single customs territory and the formation of a Customs Union with the main objectives of
ensuring free movement of goods in mutual trade, the creation of favourable conditions for
foreign trade cooperation with third countries, and the further development of economic
integration between the member States. The Customs Code of the Customs Union and the
Common Customs Tariff came into force on 1 July 2010, and on 1 July 2011, after the abolition
of all forms of customs control at internal borders, the Customs Union became fully functional.
On 18 November 2011, member States signed the Declaration on Eurasian economic integration,
which involves the launch of a single economic space beginning 1 January 2012, and the creation
of a Eurasian Economic Union by 1 January 2015.
The plan of action for the formation of the Customs Union of Belarus, Kazakhstan and
the Russian Federation has identified the organization and conduct of foreign trade and bilateral
trade statistics of the Customs Union as a priority activity. The major objectives of the collection
and dissemination of statistical data on foreign and mutual trade were identified as follows:
(a) To ensure full and accurate recording of data on trade between the member States and on
trade with third countries;
(b) To analyse the structure and dynamics of trade flows;
(c) To provide to the Customs Union governing bodies and all stakeholders the information
needed for decision-making in trade policy, the customs tariff and tariff regulation.
The agreements on the compilation of foreign trade statistics in general and on the
compilation of bilateral trade statistics as well as on the data transfer to the newly created Centre
for Statistics at the Customs Union Commission were adopted and are being implemented. The
unified methodology of external trade statistics and statistics of bilateral trade between Customs
Union members has been prepared and approved.
133
The emergence of the Customs Union of Belarus, Kazakhstan and the Russian Federation
has set before its member States a complex task of collecting statistical data on international
trade, as the customs records are no longer available for this purpose. In order to ensure
collection of the necessary data, the member States agreed to designate an agency that will be
responsible for collecting data on international trade and that should develop an action plan for
the organization of statistical observation of the mutual trade. It is expected that, based on the
latest available annual customs data, a set of potential respondents will be determined. In order to
establish an effective control of data, a database will be established detailing trade by the
commodity nomenclature codes, including average monthly quantity and value of exports and
imports and the ranges of possible unit values for these commodities. Also, it is planned to
disseminate as widely as possible among the potential respondents the information about the
purposes and timing of the introduction of a new statistical survey, frequency of reporting, and
methodology of data compilation.
There are plans to consider developing new (or revised) legislation to establish the
responsibility of respondents for failure to submit the requested data or for the submission of
incorrect data and, the responsibility of the tax authority to transfer (on a periodic basis) to the
authorized statistical body the information necessary for the compilation of trade statistics.
Availability of information from tax authorities will allow the responsible agency to organize its
work more effectively, including the establishment and periodic update of the survey frame and
the definition of the thresholds for exemption from reporting.
The member States, in particular, Belarus, have already accumulated some positive
experience of conducting such surveys, which provides a good basis for future work. However, it
should be noted that despite all the efforts undertaken, the statistics of bilateral trade between the
member States of the Customs Union compiled by means of enterprise surveys, will not be of the
same quality as trade statistics based on customs records. The data users will be properly
informed about any quality issues so that they will be in a better position to adjust to the changes
foreseen.
10.16. Other customs and economic unions. There are many other regional agreements that aim
at the promotion of economic integration and cooperation among its members, frequently with
the goal of creating a common market.107
However, a customs union, which is a critical step
towards forming a common market, entails the harmonization of external tariffs and the removal
of all tariffs on internal trade. Also, all non-tariff barriers to the free movement of goods would
need to be gradually removed. Because of the need to give up parts of national sovereignty, i.e.,
on tariff matters, trade agreements and product safety, and because of the many consequences
and the required work programme, the establishment of new full customs unions is expected to
only progress but slowly. Even in cases where countries enter a customs union, it might be the
case that customs controls would remain in place for security and other reasons. Given this
situation, countries might seek other forms of economic integration such as regional trade
agreements relying on customs controls for their enforcement.
107
Consider, for example, the experience of the Cooperation Council for the Arab States of the Gulf (GCC) (see
http://www.gcc-sg.org/eng/index.html): in 2010, six GCC countries agreed to postpone a decision on establishing a
single customs union for a few more years. The Arab Customs Union was announced at the League of Arab States
2009 Arab Economic and Social Development Summit in Kuwait; the goal is to achieve a functional customs union
by 2015 and an Arab common market by 2020.
134
B. Current challenges and good practices in the organization of data compilation
10.17. Statistical work programme in preparation of a customs union. The experiences of the
European Union, SACU, COMESA and ASEAN indicate that the preparation for a customs
union requires at least (a) the adoption of an uniform nomenclature of goods, (b) uniform rules of
origin and (c) uniform customs valuation and uniform application of certain custom procedures
to allow for the uniform application for external tariffs (which are by many countries applied at a
more detailed level than the HS six-digit level). Also, the clarification of the customs territory
(and, accordingly, the statistical territory) appears to be an essential requirement as all members
need to be aware of what territories are included and not included in the customs union. The
harmonization of other elements relevant for data compilation such as coverage, trade system,
detailed customs procedures, partner-country attribution, quality assurance, etc., might depend
on the requirements and use of the data compiled by countries. The establishment of a central
statistical body which is in charge of the above tasks is important and represents good practice in
respect of ensuring the provision of high-quality extra- and intra-trade statistics required for the
effective functioning of a customs union.
10.18. Loss of customs information on intra-union trade. The abolition of customs controls
within a customs union means that no customs records will be available for the compilation of
information on trade between members of a customs union. Possible data sources are
administrative records which might be available from taxation (value added or sales tax) or from
surveys of exporters and importers. In most countries, the overwhelming majority of exports are
conducted by medium-sized or large enterprises which might be very limited in number and
which may relatively easily be surveyed. The imports of certain goods might be equally
concentrated, i.e., conducted by a few national importers, retailer or wholesale. However, an
increasing proportion of imports might result from direct transactions between consumers and
Internet retailers, which arrange for a direct shipment to the individual consumer. In such
situation, the implementation of surveys might be more difficult and costly.
10.19. Challenges for the compilation of extra-union trade. In the European Union, which is the
most developed customs union, statistical data collection remains the responsibility of individual
member States. Statistics on extra-union trade is therefore a combination of the national statistics
of all member countries. In order for statistics of the members to be combined into reliable extra-
union statistics, it is necessary that the national statistics fulfil a certain quality standard and be
sufficiently harmonized, which can constitute a major challenge owing to the different country
circumstances.
C. Longer-term strategies
10.20. Determination of long- term data requirements. Countries within a customs union and the
customs union itself need to decide what information on trade transactions between member
countries are required (intra-union trade) and how best to fulfil the data requirements for extra-
union trade in light of the need to facilitate trade. However, all decisions should be compatible
with the international recommendations for merchandise trade statistics and allow countries to
compile their trade statistics according to those recommendations.
135
10.21. Strategy and challenges regarding intra-union trade. In the European Union, the
requirements for intra-union trade statistics mirrored to a certain degree the requirements for
extra-union trade which to some extent allows there to be exactly the same statistics on the
national level as existed before the customs union was established. There might be several
problems with such approach. Customs records do not necessarily provide a benchmark for the
information requirements, and non-customs sources can rarely provide the same set of
information as customs records; further, and maybe most importantly, to require similar or the
same information from non-customs sources as from customs records (i.e., in terms of
commodity detail) puts a significant burden on the data compilation system and data providers
for intra-union trade statistics. The development of an intra-union trade data compilation system
needs to take into account not only the data requirements on the national and customs-union
levels, the availability of data sources, the burden on respondents and the compilation system,
but also international comparability.
10.22. Strategy and challenges regarding the compilation of extra-union trade statistics in the
case of customs modernization. Enterprises within a customs union might have facilities for
production and distribution of their goods in several countries of the customs union. In order to
facilitate their trade the European Union agreed to allow a centralized customs clearance. This
means that the declaration of goods can take place in only one country, while the actual physical
clearance can take place in any county of the customs union. Countries and statistical offices
would need to rely on an exchange of customs declarations or information in order to obtain
complete information regarding their trade with countries outside the custom union, unless
additional information systems or sources were used (see paras. 10.25 and 10.26 below).
D. Further possibilities in multi - country data exchanges
10.23. Possibilities of multi-country exchanges and use of mirror data. A trading partner can
agree not to compile export information but rather to replace it with the import information
compiled by the other, as the information on imports is considered more reliable (see para.9.49
on United States of America-Canada data exchange ). A country could also refrain entirely from
compiling export and import information for a trading partner and adopt instead the partner‘s
export and import data as representing those for its imports and exports with that trading partner,
if this approach would provide the best available data. Many further variations of mutually
beneficial data exchanges and use of mirror data could be developed and implemented. However,
careful consideration needs to be given to whether such data exchanges constitute best or
desirable practices, as the differences in mirror statistics are a major quality concern (see chap.
IX, sect. C). One particular concern in the case of multi country data exchanges is the risk of
double counting.
10.24. Data exchanges between members of a customs union. In the case of a customs union,
additional possibilities of multi - country data exchanges exist and could be used in the future.
For example, the implementation of a centralized customs clearance for extra-union trade within
the European Union requires the systematic data exchange between countries since all member
States' customs administrations act as one administration within a single market. Regarding intra-
union trade, it could be envisaged that the required information would be partially (i.e., for
136
specific commodities such as oil and gas) or entirely compiled centrally on the union level and
not on the country level.
10.25. Example of the European Union: single authorization (SA), single authorization for
simplified procedures (SASP) and centralized customs clearance (CCC). Single Authorization is
an actually applied customs scheme, in which an authorization is granted by customs in one
member State (the Supervising member State) permitting in all participating member States the
use of customs procedures with economic impact (CPEI).108
Where an authorization covers the
use of the simplified declaration procedure (SDP) or the local clearance procedure (LCP), it is
referred to as an SASP. Such an authorization is a trade facilitation measure which allows an
economic operator to conduct his customs business from the member State where he is
established, irrespective of the member State in which the goods are located at the time of their
release. It is expected that a wider use of the SASP will pave the way for the implementation of
centralized customs clearance (CCC), a future standard procedure under the EU Customs Code.
Centralized customs clearance will systematically allow economic operators to centralize and
integrate accounting, logistics and distribution functions with consequent savings in
administrative and transaction costs, thus providing a genuine simplification.109
10.26. Implications for trade statistics. The single authorization for simplified procedure and the
future centralized customs clearance make it necessary to redefine the terms ―importing member
State‖ and ―exporting member State‖ for statistical purposes because the place where the
customs declarations is available is disassociated from the location of the goods. Neither the
supervising member State nor the participating member State are a priori a suitable territory for
to allocating imports or export in statistics. Only the concepts of ―member State of destination‖
for imports and ―member State of actual export‖ enable the allocation of trade to be more closely
connected to the economic impact on a member State, with a better use for balance-of-payments
and national accounts.110
Since the customs declaration as source of information on imports and
exports is lodged in another member State, the compiling member State has to either collect
information directly from economic operators (as is done actually under the single authorization
for simplified procedure for national purposes) or receive information from the member State
where the customs declaration was lodged (as is expected to be the case for centralized customs
clearance when the mutual exchange of information has been implemented).
108
The term ―customs procedure with economic impact‖ is defined in the EU Customs Code and is understood as
applying to the following arrangements: customs warehousing, inward processing, processing under customs
control, temporary importation and outward processing.
109 See the website of the European Commission (http://ec.europa.eu/taxation_customs/customs/procedural_aspects
/general/centralised_clearance/index_en.htm).
110 See the report of the Project Group on Single Authorisation for Simplified Procedures (SASP), September 2007,
pp. 9-10. Available from ec.europa.eu/taxation_customs/customs…/index_en.htm.
137
Chapter XI
Integrating trade and business statistics
11.1. Introduction. The present chapter describes the benefits and challenges of integrating
trade and business statistics in data compilation and data dissemination. Possible approaches to
linking customs records to the national trade and business register are described and illustrated
with examples. This chapter builds on the discussion of data sources and data compilation in the
previous chapters. Although chapter XI is related to chapter VII, there are differences between
the two, as chapter VII deals with the integration of data from different sources for the
compilation of IMTS, while this chapter aims at generating additional and better information, as
well as efficiency gains in the compilation of economic statistics.
A. Integrated approach to economic statistics
11.2. Background. At its thirty-seventh session, held in March 2006, the United Nations
Statistical Commission endorsed the concept of an integrated approach to economic statistics and
recommended its operational use in national economic statistics programmes; and also
recommended the establishment of a Friends of the Chair group to prepare a concept paper on
the modalities of the integrated approach to economic statistics, including the feasibility of
establishing a mechanism for improving coordination among international organizations and
work groups engaged in economic statistics.111
11.3. Report of the Statistical Commission on its thirty-ninth session. At its thirty-ninth session,
held in February 2008, the Statistical Commission welcomed with appreciation the high quality
and comprehensiveness of the report of the Friends of the Chair group on integrated economic
statistics.112
The Commission agreed with the conclusions of the Friends of the Chair (see box
XI.1). The Commission further:
(a) Affirmed the role of the System of National Accounts as the integrating framework in
economic statistics, and recognized the importance of increasing the coherence of basic
economic statistics for enhancing the quality and analytical value of both basic economic
statistics and macroeconomic statistics;
(b) Agreed with the need to collect and disseminate case studies and develop other practical
knowledge material to share experiences and guide countries in the process of implementing an
integrated approach in their national statistical systems;
(c) Also agreed that there might be a need to develop a framework for establishing such
guidelines, and recommended that such guidance on integration should focus, in particular, on
practical aspects.
111
See Official Records of the Economic and Social Council, 2006, Supplement No. 4 (E/2006/24), chap I, sect. C,
decision 37/103. Available from http://unstats.un.org/unsd/statcom/sc2006.htm.
112 Ibid., 2008, Supplement No. 4 (E/2008/24), chap. I, sect. B, decision 39/105.
138
Box XI.1
Conclusions of the report of the Friends of the Chair on Integrated Economic Statistics a
The Friends of the Chair reached the following conclusions:
(a) The integration of economic statistics is about statistical reconciliation, that is, ensuring that
the messages that statistics deliver are consistent and coherent. Reconciliation covers primary
economic statistics and macroeconomic accounts, short-and long-term economic statistics, and
national and international economic statistics. In essence, it involves dealing with conceptual,
statistical production and institutional issues. Human resources issues (increasing the awareness
of statistical agencies‘ staff concerning the impact of their work on the overall statistical system)
and information technology issues (adopting common technology) also play a role and must be
considered in that context;
(b) The integration of economic statistics is mainly driven by users‘ demand for data consistency
and coherence;
(c) It is neither possible nor desirable to propagate one single and detailed implementing
approach towards integrated economic statistics because national statistical systems are different.
There are, however, some general guiding principles;
(d) Institutional arrangements at both the national and international levels are important for the
management of integrated economic statistics and should be part of the corresponding reform
programmes.
a See E/CN.3/2008/6.
11.4. Integrated approach for international merchandise trade statistics. Reconciliation of data
from customs and non-customs sources, and reconciliation of results with related statistics, are
important aspects of an integrated approach to foreign trade statistics. An integrated approach to
foreign trade statistics means in particular that their compilation is, to the largest extent possible,
integrated and harmonized with the compilation of all other basic economic and business
statistics. Despite their long history of constituting a separate and distinct statistical domain and
their reliance (in most countries) on custom records as their main data source, foreign trade
statistics should be seen as an integral part of business statistics in respect of compilation and
dissemination, in order that their full potential as a main source of information on globalization
may be realized.
11.5. Need for linking business and trade statistics. Linking and integrating trade and business
statistics are important for data compilation and for analytical purposes. A major development in
economics statistics in recent years has been the establishment and use of national statistical
business registers (SBRs) which not only provide a framework and basis for the conduct of
business surveys but also allow the linkage of information from different data sources,
potentially leading to significant efficiency and quality gains in data collection. Further, the
integration of data from different sources provides new information for many analytical purposes
that would not otherwise exist. Accordingly, IMTS 2010 (paras. 11.5-11.6) encourages countries
to integrate their trade register with their business register and to take steps towards establishing
an integrated system of economics statistics for data compilation and analysis.113
113
Countries increasingly realize the need for an integrated approach. For instance, the members of the Steering
Group of the Regional Programme for the Improvement of Economic Statistics in Asia and the Pacific identified,
among others, the issues of coordination (lack of clear division of work across different parts of the national
139
11.6. Vision for the future of trade statistics. At its forty-first session, the Statistical
Commission adopted new international guidelines for merchandise trade statistics and statistics
for international trade in services.114
In February 2011, the Global Forum on Trade Statistics was
organized as a follow-up to the 2010 Statistical Commission decisions on trade statistics. In this
forum, trade statisticians and policy-makers agreed on a vision for the future of international
trade statistics and called for the improvement of the relevance of international trade statistics by
connecting trade information and integrating it with its economic, social, environmental and
financial dimensions while minimizing the response burden, and to improve the statistical
production process by better defining and organizing cooperation among national stakeholders.
In a background note by UNSD, Eurostat and the World Trade Organization entitled
―International trade information system in 2020‖ (―Vision 2020‖), which was endorsed by major
international organizations active in the area of trade statistics, concrete goals for the future of
trade statistics were formulated, including the integration of statistics on the trade of goods and
services and the integration of trade statistics with other business statistics that concern
international aspects.115
11.7. Trade in value added. There is very strong interest by policymakers and other user
groups in analyzing the global value chains (broadly understood as the participation of multiple
countries in the production of a single product and their respective contribution to the value
added associated with a given product) and their impact on employment and economic
development. There have been multiple case studies by researchers aiming to analyse the share
of value added generated in individual countries during the production of single products.116
It
should be noted that these studies were usually focused on a very limited number of products,
and the methodology of such calculations is still being debated. To provide broader measures of
global value chains, another approach is being developed, one that attempts to construct and use
global input-output tables in order to identify linkages between countries in the production
processes and to derive various indicators relevant to the assessment of such linkages.117
Some
statistical offices are cooperating with researchers in such studies, mostly by making available to
them data on trade and national input-output tables. Compilation of the new data items
statistical office and a need for a statistical legislature) and the statistical infrastructure (in particular quality
assurance and business registers) as key constraints on the production of the core set of economic statistics. See the
note by the Secretariat of the Economic and Social Commission for Asia and the Pacific (ESCAP) on the proposed
regional programme for the improvement of economic statistics in Asia and the Pacific (E/ESCAP/CST(2)/5),
available from http://www.unescap.org/stat/cst/2/CST2-5E.pdf. Decisions of the Committee on Statistics are
contained in the report of the Committee on its second session (E/ESCAP/CST (2)/9), available from
http://www.unescap.org/stat/cst/2/
index.asp.
114 See Official Records of the Economic and Social Council, 2010, Supplement No. 4 (E/2010/24), chap. I, sect. B,
decisions 41/103 and 41/104.
115 See http://unstats.un.org/unsd/trade/s_geneva2011/outcome.htm.
116 See, for example, Hal R. Varian, ―An iPod has global value: ask the (many) countries that make it‖, New York
Times, 28 June 2007.
117 See the presentations at the Global Forum on Trade Statistics, Geneva, 2-4 February 2011. Available at
http://unstats.un.org/unsd/trade/s_geneva2011/geneva2011.htm. Also relevant is the ―Made in the World‖ initiative
of the World Trade Organization (see http://www.wto.org/english/res_e/statis_e/miwi_e/miwi_e.htm).
140
introduced in IMTS 2010 (chap. VIII) might further assist in the analysis of global value chains.
However, the feasibility of the provision of any additional data relevant to the estimation of trade
in value added on a routine basis has to be assessed by individual countries themselves.
B. Benefits of integrating trade and business statistics
11.8. Potential benefits. In general terms, the potential benefits of integrating trade and
business statistics are additional and better information without major costs, as well as potential
cost savings through efficiency gains. One very specific and important goal is to gain more
information about traders and their specific characteristics, such as size, sector of economic
activity, and level of concentration (see box XI.5). This will allow a deeper analysis of the
impact of trade on national employment, production, value added and competitiveness in a
globally integrated economy in which many countries frequently participate in the production of
one single product.118
Also, integrating trade and business statistics can allow more information
to be obtained about specific trade transactions such as goods for processing and intra-firm trade,
or provide information for other statistical domains such as transport statistics. Further, trade
statistics can be part of a business microdata set or data warehouse allowing analysis for many
different purposes. A further benefit is that the integration of trade and business statistics on the
microlevel allows for checks of consistency between both sets of statistics.
11.9. Potential costs. The basic requirement for integrating trade and business statistics is a
functioning business register and the entry of a uniform national business identification number
on the customs declaration. The development and implementation of these two elements can take
a long time and require major efforts. Also, business registers need to be maintained on an
ongoing basis. Further, integrating different statistics requires significant efforts. Pursuing an
integrated approach to trade and business statistics is likely to require major investments in
existing statistics and strong efforts to overcome existing institutional arrangements and legal
obstacles.
C. Integrating trade and business statistics in data compilation: possibilities and examples
11.10. Principle requirements. The core elements for the integration of trade and business
statistics are (a) the availability of a functioning and up-to-date statistical business register
(SBR), which assigns a unique identification number for all registered business entities (e.g.,
enterprises, establishments or local units) and which either contains or can be linked with
relevant information on current activities of those entities, (b) the mandatory entry on the
customs declaration of a unique identification number of the company on whose behalf the
declaration is lodged and (c) the establishment of an electronic and automatic link between the
identification number used for declaration purposes and the SBR identification number, if they
are different.
11.11. The taxonomy of statistical outputs developed by Italy. To provide business analysts and
policymakers with information about key actors and drivers of competitiveness in global trade, a
118
See Eurostat, ―International trade by enterprise characteristics‖, in ―Statistics explained‖.
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/International_trade_by_enterprise_characteristics.
141
change from a product-based towards a business-oriented perspective in the compilation of trade
statistics is required. The link between the list of trade operators and the business register
provides the gateway for developing an array of new outputs. The National Statistical Institute of
Italy (ISTAT) developed a taxonomy of statistical outputs which could be achieved from the
linkage between trade and business statistics at the enterprise level. The core of this new
statistical framework is the business register. Three different types of output, depending on the
level of integration achieved, are differentiated:
Type one: by reclassifying tradeflow by trade operators, where the trade operator is
identified by the VAT code, it is possible, for instance, to derive trade statistics based on
the number of trade operators by products and markets
Type two: if trade figures are linked and integrated with the business register using the
trade operator ID code matched to the company register ID code, statistics based on the
business characteristics of exporting and importing enterprises can be derived.
Type three: a full integration of trade and business statistics is achieved when the
business register is further linked to and integrated with existing business surveys,
administrative and fiscal data, and special surveys on globalization, inter alia, on
multinationals and international sourcing. This allows the conduct of in-depth analyses of
trade and business activity.
11.12. New statistics and future developments in Italy. ISTAT has experience in the production
of new integrated trade statistics of types one and two. A large set of tables on trade operators
and exporting and importing companies is published in the Foreign Trade Statistics Yearbook,
providing information on the business structure of the exporting community. Further, ISTAT has
developed new statistics on the spatial distribution of exports and on the contribution of
multinational enterprises (MNEs) to foreign trade, and provided additional analyses on firms
involved in international trade. ISTAT is in the process of setting up an firm-level data
warehouse that integrates a number of national surveys, data on foreign trade in goods, outward
and inward multinational enterprise data and international databases, which will allow to
effectively monitor the behaviour of firms deeply engaged in globalization. One challenge is that
product-based and enterprise-based surveys are not fully harmonized. Also, there is a need for
benchmarking and calibration with respect to different target populations. The intention is to
make this warehouse accessible to researchers, taking into account confidentiality constraints. In
the case of Italy, there are no additional costs for respondents.
11.13. Linking trade and business statistics: experience of Brazil. The SISCOMEX system of
Brazil integrates the tracking and administrative, customs and exchange control of foreign trade.
It is linked to all commercial information through the national code for companies (CNPJ) and
the national code for individuals (CPF), which are mandatory fields for the declarations of
exports and imports. When a company enters its code, SISCOMEX accesses automatically the
database of companies registered at the Ministry of Finance, through which the code is
confirmed and all commercial information is transferred (complete address, city, State, national
code of economic activity, number of employees, etc.). The national code for companies consists
of 14 digits: the first 8 digits represent the company group, the following 4 digits represent the
enterprise (filial) and the last 2 digits are used to validate the complete number. This system
allows the generation and dissemination of a wide array of special reports, such as on exports by
company size, industry or State. Information deemed confidential is accessible only to the
142
enterprise itself and authorized Government officials, while the public information is available
on the Internet online system AL/ICEWE/B2 (http://aliceweb2.mdic.gov.br).
11.14. OECD-Eurostat Trade by Enterprise Characteristics (TEC) database. TEC is a joint
OECD-Eurostat exercise in which data sets are compiled by linking microdata (data at trader
level) with business registers. Under the guidance of the OECD Steering Group ―Business
Economic Statistics and Trade (BEST)‖, a first OECD set of linkage tables was sent out to
participating non-EU-OECD member countries in June 2007 (see box XI.5 below for details).
However, the tables currently provided by countries are frequently not fully comparable across
countries and over time. Future goals are improved access to microdata, improved comparability,
and inclusion of additional enterprise information. Regarding EU member States, the revision of
EU trade statistics legislation makes the annual compilation of these statistics compulsory from
reference years 2009 and 2010 onwards.
D. Ensuring the quality of the linked data sources and of the linked/integrated data
11.15. Linking data sources: matching rates–experience of the United States of America. The
United States Census Bureau collects export data at the transaction level from two main sources:
the Automated Export System (AES) and the Canada Data Exchange. Transaction-level data
includes trade value, product codes, partner country, and the trader‘s unique identifier. The
trader‘s unique identifier for AES records is the trader‘s Employer Identification Number (EIN),
issued by the United States Internal Revenue Service, and for Canada‘s records, it is the trader‘s
name. Transaction-level data are linked to enterprise characteristics in the Census Business
Register using the trader‘s unique identifier and the EIN or company name in the Business
Register. Enterprise characteristics include employment and industry classifications. While the
AES linkages are fairly straightforward, the records of Canada are associated with some
complicated name matching routines and manual matching procedures. The quality of the linked
data is very good as seen by the high match rates. The United States Census Bureau typically
matches about 89 per cent of the export value to the Business Register, and AES match rates
exceed 94 per cent, while Canada match rates are lower, close to 74 per cent. Import transaction-
level data are also matched to enterprise characteristics in the Census Business Register. Import
traders‘ unique identifiers are all reported as EINs, making these linkages also fairly
straightforward. Initial match rates have been about 87 per cent, but should improve as matching
routines are refined. Both export and import linkages are used to create the Exporter and
Importer Databases and the Profile of US Importing and Exporting Companies, which is the
publication that constitutes an offshoot of the databases. The first exporting company profile was
published with 1987 data, with annual publications since 1996. The importing company profile
was added to the publication beginning with 2009 data.
11.16. Linking of trade operator with the statistical unit: experience of the European Union. The
feasibility of linking external trade data with business registers has been tested in a series of pilot
data-collection rounds. The objective of these studies was twofold: first, to investigate to what
extent and under what conditions microdata linkages are possible; and second, to define new
statistics which could be derived from the combined data set. At the conceptual level, the
methodology can be simplified through presentation in the following framework: First, a linkage
is established between trade operators and legal units in business registers. Second, the trade
143
value of each trader, by product code and partner country, is combined with the main enterprise
characteristics (economic activity and number of employees) retrieved from the business
registers. Third, specific indicators are calculated. The quality of statistics based on data linkages
depends to a very large extent on the matching rates between source data sets. The results of the
pilot data collection rounds have shown that, in most cases, the matching rates were very high,
particularly when measured in terms of trade value.119
11.17. Business registers – experience of the European Union. Business statistics are usually
derived from surveys of businesses. Business registers are normally used as a tool for the
preparation and coordination of surveys. They detect and construct the active population of
statistical units (enterprises, local units and enterprise groups) from administrative units (legal
units) and include information on their identification, demographic, economic and stratification
characteristics, the control and ownership of units, and links with other registers. Business
registers are also used as a source of information for statistical analysis of the business
population and its demography. Although business register data cover only a few key economic
variables (e.g., employment and turnover), they can be used to obtain comprehensive data with
detailed breakdowns across a full range of activities, in contrast with data collections such as
those of structural business statistics which are largely based on surveys and are limited in
scope. The business registers play an important role in bringing trade statistics closer to the
business statistics. The links between legal units in the business registers and intra- and extra-
Union trader identification codes need to be recorded in the business registers. Thus, the business
registers provide a tool for linking detailed external trade microdata with the statistical units
utilized in business statistics.120
Box XI.2
Common use of relevant terminology
Exporter/seller/consignor
The exporter is the institutional unit that sends goods to other countries; most often goods are
sent for sale and therefore the exporter can also be referred to as the seller. The term ―consignor‖
refers to the natural or legal person identified on the customs declaration that is sending the
goods to another country. The terms ―exporter‖, ―seller‖ and ―consignor‖ can, in general, be used
synonymously.
Importer/ buyer/ consignee
The importer is the institutional unit that brings goods from abroad and frequently the importer is
the buyer of the good. The term ―consignee‖ refers to the natural or legal person identified on the
customs declaration to which the goods are sent and who will physically receive the goods; the
consignee, however, is not necessarily the importer or buyer;
Broker/ trader/ agent
These are institutional units that facilitate the sending of the goods to another country
119
See http://epp.eurostat.ec.europa.eu/portal/page/portal/external_trade/documents/External_trade_statistics_by_
enterprise_characteristics.pdf.
120 Ibid.
144
Declarant
The term ―declarant‖ refers to the natural or legal person that completes the customs declaration.
The exporter or seller can complete the customs declaration himself but frequently specialized
brokers/traders/agents are in charge of completing the customs formalities, including the filling
in of the custom declaration.
Box XI.3
Statistical units in a business register
For the purposes of the statistical production process, the principle statistical units are the
enterprise, the establishment (local kind of activity) and the enterprise group:
Enterprise
An enterprise is the view of an institutional unit as a producer of goods and services. The term
―enterprise‖ may refer to a corporation, a quasi-corporation (unincorporated enterprises
belonging to households or government units), an non-profit institution (NPI) or an
unincorporated enterprise (2008 SNA,a para. 5.1).
Establishment
An establishment is an enterprise, or part of an enterprise, that is situated in a single location and
in which only a single productive activity is carried out or in which the principal productive
activity accounts for most of the value added (2008 SNA, para. 5.2).
Enterprise group
Many enterprises operating within an economy are linked with other enterprises by complete or
partial common ownership and a shared management structure to form an enterprise group (2008
SNA, para. A4.12); a System of National Accounts 2008 (United Nations publication, Sales No. E.08.XVII.29)
Box XI.4
Definitions of “exporter” and “enterprise” in the European Union
The EU legislation currently defines only the terms ―exporter‖ and ―enterprise‖; however, the
discussion about "importer" has been recently launched.
Exporter a
The exporter is the person on whose behalf the export declaration is made and who is the owner
of the goods or has a similar right of disposal over them at the time when the declaration is
accepted.
Enterprise b
The enterprise is the smallest combination of legal units that is an organizational unit producing
goods or services, which benefits from a certain degree of autonomy in decision-making,
especially for the allocation of its current resources. An enterprise carries out one or more
activities at one or more locations. An enterprise may be a sole legal unit.
Explanatory note: The enterprise thus defined is an economic entity which can therefore, under
certain circumstances, correspond to a grouping of several legal units. Some legal units, in fact,
perform activities exclusively for other legal units and their existence can only be explained by
administrative factors (e. g. tax reasons), without them being of any economic significance. A
large proportion of the legal units with no persons employed also belong to this category. In
145
many cases, the activities of these legal units should be seen as ancillary activities of the parent
legal unit they serve, to which they belong and to which they must be attached to form an
enterprise used for economic analysis. a Article 788 of Commission Regulation (EEC) No. 2454/93 of 2 July 1993 laying down provisions for the
implementation of Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code. b Council Regulation (EEC) No 696/93 of 15 March 1993, as last amended by Regulation (EC) No. 1137/2008 of the
European Parliament and of the Council of 22 October 2008.
E. Generation and dissemination of additional information: possibilities and examples
11.18. Tables published within the TEC framework developed by Eurostat and OECD. The
Trade by Enterprise Characteristics (TEC) framework defines a harmonized set of indicators
describing various aspects of the structure of international trade from the viewpoint of the
characteristics of enterprises. Since the aim of these indicators is to describe enterprises rather
than products, the activity sector of the trader is used as the primary classification in each
indicator. There are five indicators which are available both for trade flows (imports and exports)
and for intra- and extra-EU trade. All indicators use the enterprise as the statistical unit and are
expressed in terms of number of enterprises and trade value. The indicators are obtained by
linking data on the microlevel.
Box XI.5
Indicators of trade by enterprise characteristics (TEC)
1. Trade by activity sector and enterprise size class
Trade by activity sector and enterprise size class shows the contribution of each economic
activity and size class (measured in terms of number of employees) to total trade. This makes it
possible, for instance, to analyse the impact of external trade on employment and to estimate the
importance of small and medium-sized enterprises.
2. Concentration of trade by activity
External trade is typically concentrated on a few enterprises. This indicator shows how much of
the total trade is accounted for by the top 5, 10, 20, etc., enterprises.
3. Trade by partner countries and activity
Trade by partner countries shows how many enterprises were trading with certain partner
countries or country zones, and the trade value they accounted for. This makes it possible to
identify most typical exports or imports markets.
4. Trade by number of partner countries and activity
Number of partner countries shows how geographically diversified the exports markets are. For
imports, it shows the number of countries from which goods are imported.
5. Trade by commodity and activity
Trade by commodity and activity allocates the trade of each commodity to the economic activity
of the trading enterprise. This shows which sectors were involved in the trade of each product
group.
11.19. Trade by enterprise characteristics: an alternative approach. IMTS 2010 (para. 11.6)
encourages countries to take steps towards establishing an integrated system of economics
statistics for data compilation and analysis and to integrate their trade register with their business
register. However, faced with the growing demand for information from users regarding the link
between international flows of goods and national economic activity, and in the absence of a link
146
at the microlevel, enabling the identification of companies in the customs records and industrial
surveys, counties might opt for the alternative of building a macrolevel correlation table between
the classifications of industries and products. Countries may find this correspondence useful
when analysing trade flows by activity categories. However, the approach as described in
previous examples, i.e., to identify the activity of the trader and perform appropriate
aggregations, should be given preference whenever possible (see IMTS 2010, para. 3.29).
11.20. Integrating trade information in business statistics. Business statistics contain limited
information on external trade. By linking trade and business statistics, the wealth of information
on the demography and activities of businesses can be supplemented with detailed trade
information, allowing the analysis of the impact of trade on businesses.
11.21. Special surveys of trading enterprises. Often, certain information, such as trade between
related enterprises or goods for processing without change of ownership, cannot be derived from
customs records. The link with the business registers allows the conducting of surveys of
specifically identified enterprises whose aim is to obtain such information. Also, special surveys
of trading enterprises could be used to explore the link between trade in goods and trade in
services.
11.22. Trade statistics as part of a geospatial information system. At its forty-first session, held
in February 2010, the Statistical Commission recognized, in paragraph (b) of its decision 41/110
on global geographic information management, the importance of the integration of geographical
and statistical information and the opportunities provided in that context by the swift
development of information technology, noting that national statistical offices are playing an
increasing role in such integration.121
Linking trade information to the business registers allows
regional analysis of trade patterns; for example, the Secretariat of Foreign Trade of the Ministry
of Development, Industry and Foreign Trade of Brazil publishes, using the address of the
enterprises, a report on trade balance by States and municipalities (see para. 11.13).122
Linking
this trade information with localized employment or tax information (e.g.., average wages,
employment rate, enterprise and personal tax revenue) allows a detailed analysis of economic
impact of trade.
F. Required institutional and working arrangements
11.23. Agreement on a joint vision and commitment to integrating trade and business statistics.
The cooperation of different departments within the same agency and of different agencies
responsible for different parts of the business statistics programme is required for the
development and implementation of a programme of integrated economic statistics. The
cooperation itself and the development and implementation of such a programme require the
commitment of significant human resources and the willingness to accept changes in existing
121
See Official Records of the Economic and Social Council, 2010, Supplement No. 4 (E/2010/24), chap. I, sect. B.
122 The results can be distorted if the headquarters reside elsewhere than at the location where the economic activity
is carried out. Therefore, the use of the local unit would be preferable when linking trade and business statistics.
However, it might be very difficult or even impossible to compile reliable business and trade information on a local-
unit basis.
147
practices. It is therefore crucial that the concerned agencies and departments within agencies
agree, or at least accept, the goal and vision for an integrated system for business and economic
statistics.
11.24. Statistical business register and data access at compilation. In many countries, more than
one organization or agency is involved in trade and business statistics (e.g., the national
statistical institute, the customs authority, the central bank and other agencies). The
establishment of a statistical business register, which would provide a uniform basis for data
collection by various agencies and ensure coherence of data compiled in various statistical
domains, requires legal arrangements to allow sharing and use of information on individual
enterprises among these agencies—information that would be otherwise subject to
confidentiality.
11.25. Access to and use of information. Business registers and data warehouses contain
sensitive information about businesses. According to principle 6 of the Fundamental Principles
of Official Statistics,123
individual data collected by statistical agencies for statistical
compilation, whether they refer to natural or legal persons, are to be strictly confidential and
used exclusively for statistical purposes. The generation of enterprise microdata from trade
statistics and its combination with information from existing business statistics require solving
issues of confidentiality and the protection of highly sensitive business data.
123
Available from unstats.un.org/unsd/methods/stator/FP-English.htm.
Part three. Compilation of particular data items
151
Chapter XII
Time of recording
12.1. Introduction. The present chapter provides additional clarification on the statistical
concept of time of recording, as defined in IMTS 2010, chap. I, on scope and time of recording,
and describes good practices in the approximation of time of recording in the use of both
customs records (see chapter II of the present Manual) and non-customs data sources (see chaps.
III and IV). Section A provides an overview of the basic concept and data sources for
determining the time of recording, while subsequent sections provide additional details regarding
the determination of time of recording under different circumstances and in different cases.
A. Basic concepts and data sources: an overview
12.2. Time of recording. The time of recording is defined in IMTS 2010 (para. 1.8), as the time
when goods enter or leave the economic territory of a country. In general, it is sufficient to
identify the day when the goods physically cross the boundary of economic territory. This day is
to be used to allocate a given flow of goods to the shortest reference period for which official
trade statistics are compiled. For example, if certain goods entered the economic territory of a
country on 1 January and in this country the shortest reference period for trade data compilation
is a month, then those goods should be included in January imports irrespective of when these
statistics will be officially published. The country practices in the implementation of this general
guideline vary to some extent, depending on the availability of relevant data sources and other
circumstances.
12.3. Use of different data sources. Customs records are the main source for determining time
of recording. However, the economic territory in many cases does not coincide with the customs
territory and some cross-border movements of goods are not sufficiently reflected in customs
records. Therefore, it is a good practice (a) to use both customs and non-customs sources of
information and (b) to develop sound approximation techniques for the cases where no reliable
data exist and to consistently apply such techniques to ensure maximum possible data
comparability.
12.4. Customs as data source: lodgement of customs declaration and date of lodgement. IMTS
2010 states that in the case of customs-based data-collection systems the time of recording can
be frequently approximated by the date of lodgement of the customs declaration. Compilers
should be aware that the revised Kyoto Convention (RKC) does not define the term ―lodgement
of customs declaration‖ and does not prescribe the rules regarding the determination of the date
of lodgement. However, from the context of the Convention, it is understood that the date of
lodgement is the date when customs registers124
(or accepts) the declaration for processing,
taking into account that certain customs requirements were satisfied.125
124
The terms ―register‖ and ―registered‖ are used in several RKC standards, for example, standards 3.26 and 3.30,
respectively.
125 See IMTS 2010, para. 2.22.
152
12.5. Requirements for lodgement of the customs declaration. The customs requirements for
lodgement of the customs declaration include provision that customs ―shall limit the data
required in the Goods declaration to only such particulars as are deemed necessary for the
assessment and collection of duties and taxes, the compilation of statistics and the application of
Customs law‖ (General Annex, Chapter 3, Standard 3.12). Further, according to the Convention:
―Where, for reasons deemed valid by the Customs, the declarant does not have all the
information required to make the Goods declaration, a provisional or incomplete Goods
declaration shall be allowed to be lodged, provided that it contains the particulars deemed
necessary by the Customs and that the declarant undertakes to complete it within a specified
period‖ (ibid., Standard 3.13). Moreover: ―Where national legislation lays down a time limit for
lodging the Goods declaration, the time allowed shall be sufficient to enable the declarant to
complete the Goods declaration and to obtain the supporting documents required‖ (ibid.,
Standard 3.23). Further: ―National legislation shall make provision for the lodging and
registering or checking of the Goods declaration and supporting documents prior to the arrival of
the goods‖ (ibid., Standard 3.25).
12.6. Use of time of lodgement. In view of the above provisions, compilers should be aware
that the date of lodgement may not be appropriate in all cases for determining the time of
recording. The lodgement of the declaration and the actual time when goods cross the border of
the economic territory of a country may, in some cases, vary significantly. Therefore, it is good
practice for trade statistics compilers to consult with national customs authorities about the rules
that define the date of lodgement and assess in which cases it can serve as an acceptable
approximation of the time of recording and when it should be replaced with a more appropriate
date. As practices and terminology vary across countries, some countries might use the date of
release from customs, the date of assessment or the date of acceptance by customs, instead of the
date of lodgement, for determining the time of recording. This might be appropriate if any of
those dates reflect an appropriate approximation of when goods enter or leave the economic
territory.
12.7. Use of non-customs sources. It is good practice for non-customs sources to be used only
in cases where customs records do not exist or the date of lodgement significantly deviates from
the moment when goods physically cross the boundary of the economic territory of a country.
12.8. Use of estimates. In a number of cases, the time of cross-border movement of goods is
not reflected in any data source. In such cases, development of sound approximation techniques
becomes a necessity in order to ensure a better temporal data comparability.
12.9. Metadata on sources and rules used for establishing time of recording. The
determination of which data sources and rules should be used while establishing the time of
recording, so as to ensure both compliance with the international recommendations and high-
quality national data, is the responsibility of the national compiling agency. It is good practice to
develop clear and practical rules to ensure (a) that the time that will be used for the purposes of
time of recording is the closest possible approximation of the time when goods actually
enter/leave the economic territory of the country and (b) that reliable methods of establishing
such a date are established and consistently applied. The description of the selected sources and
rules should be part of the country‘s trade metadata.
153
B. Determination of the time of recording and customs territory
12.10. Use of the customs territory as an approximation of the economic territory. It is good
practice to use the boundary of the customs territory as the boundary of the economic territory
(even if they diverge to some extent from each other) provided that no important economic
activity is occurring in that part of the economic territory that is outside of the customs territory.
In this case, the use of date of lodgement of the customs declaration as the time of recording is a
good practice, except when the date of lodgement deviates significantly from the time of actual
border crossing by the imported/exported goods (as determined by the responsible agency).
However, if an important economic activity is carried out in any part of the economic territory
outside of the customs territory (e.g., industrial free zones), the customs boundary cannot be used
as a good approximation of that of the economic territory. In such cases, the time of recording of
goods entering and leaving such parts of the economic territory should be either determined
using non-customs sources or estimated.
12.11. Time of recording in the case of the special trade system. Under the special trade system,
the time of recording should be the time when goods enter or leave that part of the economic
territory that is included in the statistical territory of the compiling country. As in the case of the
use of the general trade system, this time may be approximated by the date of lodgement of the
customs declaration when goods are directly entering the customs territory (assuming that all of
the customs territory is within the statistical territory). However, other dates need to be used
when goods enter parts of the statistical territory outside the customs area.
12.12. Use of additional sources of information in the case of the special trade system. Even if
goods are moving in and out of free zones without payment of duties or completion of certain
formalities, customs records of such movements might exist. This information might be valuable
to trade statistics compilers in determining the time of recording. However, the use of different
non-customs sources, such as surveys, etc., becomes a necessity if no sufficient customs
information for the determination of the time of recording exists. For example, in the United
States of America, the time of recording used for goods entering foreign trade zones is the date
when the merchandise was received at the zone. This information is provided by the zone
operator.
Box XII.1
Time of recording in Brazil
In Brazil, the time of recording of exports is that when the goods leave the economic territory
(general trade system), which in practice is the time of clearance of the goods for shipment. In
the case of imports, the time of recording is that when the goods enter into the free circulation
area (special trade system), which is the time of clearance of goods for consumption, or when
they enter into the Manaus free zone, whose operations follow the general trade system.
C. Use of the lodgement of the customs declarations for determining the time of recording
12.13. Lodgement of provisional or incomplete declarations. If the declarant is unable to
provide all the required information at the time of lodgement of the declaration, the customs
154
authority may accept a provisional or incomplete declaration and release the goods under the
condition that the declarant provide the missing information thereafter within a specified period
in an additional declaration. The time of lodgement of the additional declaration and the time
when goods cross the border of the customs territory may be far apart. However, both
declarations refer to the same transaction and must be linked during the data processing.126
Compilers are advised to use (a) the provisional or incomplete declaration to identify the time of
lodgement and collect provisional data and (b) the additional declaration to revise or complete
trade data, with the time of recording remaining unchanged.
12.14. Presentation of the declaration after release of goods. Compilers should take into
account that customs may allow traders to release goods before the presentation of the
corresponding declaration. Such authority is given to a growing number of traders in order to
enable speedy release of the imported or exported goods without a wait for collection of the
documents needed for completion of the declaration. It is good practice to include the data
provided in such declarations in the monthly statistical reports corresponding to the months when
the goods actually enter and leave the economic territory of a country. If necessary, this can be
done as part of the regular revision of monthly data.
12.15. Periodic lodgement of a declaration. When goods are frequently imported (or exported)
by the same company or person, the RKC recommends (General Annex, Chapter 3, Transitional
Standard 3.32) that customs allow a single goods declaration to cover all imports (or exports) by
that company or person for a particular reference period. That facility may be granted if the
company or person keeps proper commercial records and where necessary control measures can
be taken. The RKC recognizes the right of customs to require that the declarant produce, at the
time the goods actually cross the border, a commercial or official document such as an invoice,
waybill or dispatch note, etc., giving the main particulars of the concerned consignment.
Compilers are advised to periodically review such documents, if permitted by law, in order to be
able to assign the trade to the appropriate month (based on the time of crossing the border),
especially in cases when trade is significant in value (amount) and/or the reference period for
which the trader reports data to customs does not coincide with the period used for statistical
reporting (normally the calendar month). It is good practice for compilers to work with customs
agencies to ensure that the reference period for which traders are required to report data to
customs coincides with the period used by customs for the statistical reporting.
12.16. Time of recording in the case of split consignments. For the convenience of shipment,
certain goods may be disassembled into several parts which may, with customs permission, leave
the exporting country and enter the importing country at different times and at different
exit/entry points. Since goods exportation or importation is not completed until the last part
leaves or enters the country, it is a good practice to use the date when the last part is declared to
the customs of the exporting or importing country instead of the time of lodgement of the
declaration covering all of the consignment.
12.17. Identification of best proxy dates for time of recording. In all cases where the date of
lodgement is inadequate (e.g., if goods are cleared well in advance or long after their arrival) or
126
In the European Union also simplified and supplementary declarations are used and they are treated as one.
155
non-customs data sources are used (e.g., enterprise surveys), more appropriate dates for the time
of recording should be identified and used (e.g., the date of arrival or departure of the goods
carrier as indicated in the transportation documents). It is the responsibility of countries‘
statistical authorities to identify (or estimate) the best proxy date for the general guideline on
time of recording by taking into account the peculiarity of national rules on administrative
procedures and the need for consistency in the application of the selected method.
D. Use of non-customs data sources
12.18. Use of shipping manifests, bills of landing and other transport documents. It is good
practice to use such documents for verification purposes or when customs declarations are
absent. However, it is recognized that such practice should be limited, owing to resource
constraints and other considerations, to important and exceptional cases
12.19. Time of recording in enterprise surveys. Countries applying the general trade system
frequently have to use enterprise surveys to ensure complete coverage of their trade statistics.
The date of exports or imports indicated in such surveys reflects business accounting practices,
and, normally, will not coincide with the date of lodgement of the corresponding customs
declaration or with the time of physical crossing of the country‘s border, but rather with the time
when goods change ownership.
Box XII.2
European Union experience on time of recording
The time of recording, defined in the EU as the reference period, of the information to be
provided within the Intrastat system shall be the calendar month of dispatch or arrival of the
goods. This is the month in which the goods physically enter or leave the statistical territory of
the member State. However, the reference period may be adapted by member States to take into
account the linkage with value added tax (VAT) obligations according to article 6 (2) of
Regulation (EC) No. 638/2004 of 31 March 2004. Member States may define the reference
period to which the monthly trade flows should be allocated as the calendar month when the
chargeable event for VAT purposes occurs, thus when the goods are supplied. The supply of the
goods is regarded as having been effected when VAT shall have become chargeable on issue of
the invoice or on the fifteenth day of the month following that in which the chargeable event
occurs, if the invoice was not issued. This means that the goods are recoded when they are
delivered, or with one month‘s delay. The majority of member States adopted the VAT principle
of recording for Intrastat.
Member States may adapt the period of reference in cases where the Customs declaration is used
for intra-EU trade statistics. In such cases, the reference period may then be defined as the
calendar month during which the declaration is accepted by Customs. The reference period for
extra-EU trade statistics shall indicate the calendar year and month in which the goods are
imported or exported. When the customs declaration is the source for records on imports and
exports, the reference period shall indicate the calendar year and month when the declaration is
accepted by customs authorities.
12.20. Use of time of change of ownership. In exceptional cases where the general guideline of
recording goods when they enter or leave the economic territory is not applicable or is
156
insufficient (for example, in the case of trade in ships and aircraft), IMTS 2010 (para. 1.4)
recommends using the criterion of change of ownership to determine whether certain goods
should be recorded. In such cases, the time of recording should be determined by the time of
change of economic ownership. The time of change of ownership is defined in accordance with
2008 SNA and BPM6127
as the time of change of economic ownership from a resident unit to a
non-resident unit. The time when the economic ownership changes from a resident unit to a non-
resident unit can be approximated by the time when claims and obligations arise, are transformed
or are cancelled. Although the principle is clear, its implementation is far from simple, as parties
do not always apply the same rules. Even when they do, differences in actual recording may
occur for practical reasons such as delays in communication. Consequently, transactions may be
recorded at different times by the transactors involved, sometimes even in different accounting
periods. It is therefore good practice for trade statisticians to consult with compilers of balance of
payments and national accounts as necessary.
12.21. Time of recording of trade over fixed transmission lines. Trade in goods which
continuously cross borders over fixed transmission lines (e.g., pipelines for the transmission of
oil, natural gas or water, power lines for the transmission of electricity, etc.) should be allocated
to the proper shortest reference period based on (a) the actual period of transmission recorded in
the customs declarations submitted by the line operators or (b) their administrative records,
following the same requirements as for all other enterprise surveys conducted for the purposes of
compilation of trade statistics. It is good practice for compilers of the exporting and importing
countries of such goods to agree on the compilation procedures, including time of recording, in
order to ensure data comparability.
127
International Monetary Fund, Balance of Payments and International Investment Position Manual, 6th
ed.
(Washington, D.C.; 2009).
157
Chapter XIII
Harmonized Commodity Description and Coding System (HS)
13.1. Introduction. The present chapter describes the Harmonized Commodity Description and
Coding System (HS), which is recommended by IMTS 2010 (para. 3.11) for the collection,
compilation and dissemination of international merchandise trade statistics at the most detailed
level. It is based on chapter III of IMTS 2010, on commodity classifications. This chapter
provides an overview of the HS and details of the latest (fifth) edition of HS which entered into
force on 1 January 2012 (HS12), discusses application of HS for coding traded goods as well as
some particular aspects of quality assurance related to the classification of goods (quality
assurance in general is covered in chap. IX), and describes country experiences in the use of HS
for data dissemination and analytical purposes. Understanding HS by trade data compilers is
necessary for a better understanding of the classification decisions made by national customs
authorities, for setting up appropriate validation and editing checks, for communicating more
effectively with both customs authorities and the user community, and for developing the ability
to assist in the formulation of proposals for future revisions of HS. Other international
classifications relevant primarily to the dissemination and analysis of international merchandise
trade statistics are described in chapter XXVII.
A. Recommendation on using HS
13.2. HS as the recommended classification for IMTS compilation and dissemination. The
International Convention on the Harmonized Commodity Description and Coding System (HS
Convention) was adopted by the Customs Cooperation Council (CCC) in Brussels on 14 June
1983, and entered into force on 1 January 1988 (HS88). The Harmonized Commodity
Description and Coding System (popularly known as the Harmonized System, or HS) is a
nomenclature comprising headings and subheadings and their related numerical codes, sections,
and chapters, as well as Subheading Notes and the General Rules for the Interpretation of the
Harmonized System, as set out in the Annex ―Nomenclature of the Harmonized System‖ to the
HS Convention.128
The United Nations Statistical Commission, at its twenty-seventh session,
hold from 22 February to 3 March 1993, recommended that countries adopt the HS for the
compilation and dissemination of their trade statistics.129
13.3. Implementation of HS in IMTS compilation and dissemination. As of 2011, almost all
countries use the HS for trade data compilation and dissemination. This is a very significant
achievement, as it ensures the best possible international comparability of national trade data.
However, experience shows that many countries face significant challenges in the consistent
application of HS.
128
As of 7 January 2013, there were 146 contracting parties to the Convention, and about 60 countries or territories
that were not contracting parties but were using the HS for customs/statistical purposes. The HS, when incorporated
in the country‘s customs tariff, becomes a national law. Entering incorrect tariff codes in the goods declaration may
entail legal consequences.
129 See Official Records of the Economic and Social Council, 1993, Supplement No. 6 (E/1993/26), para. 162 (d).
158
B. Overview
13.4. Obligations of contracting parties. The HS is a legal instrument. A contracting party to
the HS Convention has two main obligations: to bring its customs tariff and statistical
nomenclatures into conformity with the HS; and to make its import and export trade statistics
publicly available at the six-digit level or beyond.130
Fulfilling these obligations requires that
contracting parties use all the HS headings and subheadings and numerical codes, without
addition or modification; that they apply, without modification, the General Rules for the
Interpretation of the Harmonized System as well as all section, chapter and subheading notes;
and that they follow the numerical sequence of the HS.131
13.5. Maintenance of the Harmonized System. In accordance with the Preamble to the HS
Convention, which recognized the importance of ensuring that the HS is kept up to date in the
light of changes in technology or in patterns of international trade, the HS is regularly reviewed
and revised. The HS Convention established the Harmonized System Committee (HSC),
composed of representatives from each of the contracting parties, which meets twice a year. The
HSC is assisted in its work by its Working Party, by the Review Subcommittee, and by the
Scientific Subcommittee. The HSC, inter alia, considers the needs of users, as well as changes in
technology and patterns of international trade, and proposes amendments to the HS based on its
considerations, prepares recommendations about and circulates information concerning the
application of the HS, and gives guidance on matters concerning the classification of goods.
13.6. To assist users in the implementation of the HS, the World Customs Organization issues
and periodically updates the following supplementary information:
Explanatory Notes to the Harmonized System
Alphabetical Index to the Harmonized System
Compendium of Classification Opinions to the Harmonized System
Harmonized System Commodity Database
E-learning Modules on the Harmonized System
Correlation Tables between the latest and previous version of the HS
13.7. Revision policy of the Harmonzied System,. WCO revises the HS as necessary,
approximately every five years. From 1 January 2012 onward, the HS Nomenclature 2012
edition (HS12) is the valid version applied in international trade transactions. Details of the
HS12 are provided in section C below. There are initial plans for the next set of amendments to
be in effect in 2017. The Statistical Commission, at its twenty-seventh session, recommended
taking fully into account the statistical implications of any changes proposed for the HS and the
statistical needs and capacities of developing countries.132
It is good practice for the compilers of
trade statistics to work closely with the national customs authorities in developing proposals for
future HS amendments.
130
Developing countries, however, are permitted to apply the HS partially, i.e., they may decline, at least initially, to
apply all or some of the subheadings and yet fulfil the obligations arising out of article 3.
131 HS Convention, article 3 (a) (i) – (iii).
132 See Official Records of the Economic and Social Council, 1993, Supplement No. 6 (E/1993/26), para. 162 (e).
159
C. 2012 edition of the Harmonized System (HS12)
13.8. The HS12 structure and the classification scheme. The HS is a structured nomenclature
comprising a series of four-digit headings, most of which are further subdivided into five- and
six-digit subheadings. The 2012 edition of the HS comprises 5,205 groups of goods identified by
a six-digit code (compared with 5,052 in the 2007 edition) and is provided with the necessary
definitions and rules to ensure its uniform application. HS12 comprises a total of 1,224 headings
which are grouped in 96 Chapters,133
the latter being themselves arranged in 21 Sections. The
headings are identified by a four-digit code, with the first two digits indicating the Chapter in
which the heading appears (a leading zero is used with the first nine Chapters) and the second
pair of digits referring to the position of the heading within the Chapter.
13.9. The general structure of HS12 is as follows:
Sections I to IV: Agricultural products
Sections V to VII: Minerals, chemical and related products, plastics, rubber and
articles thereof
Sections VIII to X: Animal products, such as hides, skins and furskins, as well as
wood, cork, pulp, paper, and articles thereof
Sections XI and XII: Textiles, footwear and headgear
Sections XIII to XV: Articles of stone, plaster, cement, asbestos, mica and the like,
ceramic products, glass, pearls, precious or semi-precious stones,
precious metals, jewelry, base metals and articles thereof
Section XVI: Machinery, mechanical appliances and electrical equipment
Section XVII: Vehicles, aircraft, vessels and associated transport equipment
Section XVIII: Optical, photographic, cinematographic, measuring, checking,
precision, medical or surgical instruments and apparatus, clocks
and watches, musical instruments
Section XIX: Arms and ammunition
Sections XX and XXI: Miscellaneous manufactured articles, such as furniture, lighting
fittings, prefabricated buildings, sports requisites, works of art,
collectors‘ pieces and antiques
Box XIII.1
Further information on the HS structure and the classification scheme
Classification scheme. The HS classification scheme is determined by the requirement that the
HS should enable customs officers to classify goods presented to them by referring mainly to
characteristics that are either directly observable or that can be established by the use of
scientific instruments. Therefore, many of the HS sections, chapters and headings are defined in
terms of the goods‘ natural origin or material of production. However, natural origin or material
of production is not always what gives goods their essential character. In some cases, goods are
133
HS Chapter 77 is reserved for possible future use and HS Chapters 98 and 99 are reserved for special use by
contracting parties. Countries should avoid, where possible, the use of Chapters 98 and 99.
160
normally classified by industry or by main use. For example, the sections:
―Live animals; animal products‖ (Section I), ―Vegetable products‖ (Section II) and ―Mineral
products‖ (Section V) are defined by natural origin or material of production; while
―Products of the chemical or allied industries‖ (Section VI) and ―Vehicles, aircraft, vessels
and associated transport equipment‖ (Section XVII) are defined by industry or by main use.
Order of goods. As a general rule, goods are arranged in order of their degree of manufacture:
raw materials first, followed by unworked products, semi-finished products and finished
products. For example, live animals fall in Chapter 1; animal hides and skins, in Chapter 41; and
leather footwear, in Chapter 64. Although a higher-level category may be defined mainly by one
criterion, its subdivision into lower-level categories can be defined by other(s). For example:
Leather and articles of leather belong in Section VIII but, irrespective of having the same
animal origin, they are classified in different chapters to reflect different stages of production
(leather in Chapter 41; articles of leather in Chapter 42);
Heading 62.06 (―Women‘s or girls‘ blouses, shirts and shirt-blouses‖) is divided into five
subheadings according to the material from which they are made (of silk or silk waste,
6206.10; of wool or fine animal hair, 6206.20; of cotton, 6206.30; of man-made fibres,
6206.40; of other textile materials, 6206.90).
Two categories of subheadings. Compilers of trade statistics should be aware that subheadings
can be separated into two categories:
Subheadings covering goods specifically identified as a part of the heading by indicating one
or more specific attributes (e.g., ―Corks and stoppers‖ of natural cork: 4503.10)
Residual subheadings covering all goods of the respective heading not included in its other
subheadings (e.g., ―Other‖ articles of natural cork: 4503.90).
The latter category comprises about 22 per cent of all 6-digit codes. Such subheadings may cover
highly diverse goods, and their use in the coding of particular items should be undertaken with
special care. Also, setting the control range for such subheadings is problematic, thus creating a
data-quality issue.
Splitting of headings into “one-dash” subheadings. Some headings are split into several ―one-
dash‖ subheadings. Each such subheading is identified by a six-digit code, where the first four
digits represent the heading‘s code, and the last two digits refer to the subheading's position
within the heading. For example, heading 01.04 (―Live sheep and goats‖) is split into two one-
dash subheadings: 0104.10 (―Sheep‖) and 0104.20 (―Goats‖).
One-dash subheadings divided into “two-dash” subheadings. The one-dash subheadings can be
further divided into ―two-dash‖ subheadings. In such cases, one-dash subheadings are not
coded; codes are assigned only to the two-dash subheadings. For example, heading 01.03 (―Live
swine‖), is split into two one-dash subheadings: ―Pure-bred breeding animals‖ and "Other". The
former subheading is not further subdivided and is coded (0103.10), while the latter is split into
two parts and not coded. Rather, it is subdivided into "Other, weighing less than 50 kg" and
"Other, weighing 50 kg or more", which are coded 0103.91 and 0103.92, respectively.
Headings that do not contain subheadings. Headings that do not contain subheadings are treated,
for data-processing purposes, as six-digit codes, carrying two zeros as their last two digits.
161
Section, Chapter and Subheading Notes. The headings and subheadings of the HS are
accompanied by Section, Chapter and Subheading Notes and interpretative rules, which form an
integral part of the HS and are designed to facilitate classification decisions in general and to
clarify the scope of the particular Sections, Chapters, headings and subheadings.
13.10. Causes of amendments contained in HS12. Environmental and social issues of global
concern are the major feature of the HS12 amendments, particularly owing to the use of the HS
as the standard for classifying and coding goods of specific importance to food security and the
early warning data system of the Food and Agriculture Organization of the United Nations
(FAO). The volume of amendments within, for instance, Chapter 3, for the separate
identification of certain species of fish and crustaceans, mollusks and other aquatic invertebrates,
is substantial. The modifications aim at improving the quality and precision of trade data in these
commodities. The amendments include, inter alia, improved specifications for species from the
southern hemisphere. These amendments will enable economic trends in products other than
those familiar to North Atlantic consumers to be monitored. In the same vein, new subheadings
have been created for the separate identification of certain edible vegetables, roots and tubers,
fruit and nuts, as well as cereals. The HS12 also features new subheadings for specific chemicals
controlled under the Rotterdam Convention of the Prior Informed Consent Procedure for Certain
Hazardous Chemicals and Pesticides in International Trade134
and ozone layer depleting
substances controlled under the Montreal Protocol on Substances that Deplete the Ozon Layer.135
Other amendments resulted from changes in international trade patterns. These include deleting
43 subheadings due to the low volume of trade in specific products, separately identifying certain
commodities in either existing or new headings, and reflecting advances in technology where
possible. Finally, a number of amendments aim to clarify texts to ensure uniform application of
the HS.
13.11. Reuse of codes. Whenever revisions are made to the HS, some existing items are deleted
and new items are added by the creation of new headings (four-digit codes) or subheadings (six-
digit codes). In order to accommodate users who maintain data under different versions of the
HS, code numbers for commodities that have been deleted are not re-used until a certain period
has elapsed, unless reuse is unavoidable. Where possible, compilers are encouraged to follow the
same practice for the more detailed commodity codes used in national commodity classifications.
13.12. Implementation of the HS12: correlation tables. The WCO Secretariat has issued the
correlation tables between the 2012 and 2007 versions of the HS,136
and updated HS
publications, such as the Explanatory Notes, the Compendium of Classification Opinions and the
Alphabetical Index. Customs administrations have the serious task of ensuring timely
implementation of HS12, as required by the HS Convention. Trade data compilers are advised to
cooperate with national customs administrations in ensuring that data collection in terms of
HS12 is carried out on time.
134
United Nations, Treaty Series, vol. 2244, No. 39973.
135 Ibid., vol. 1522, No. 26369.
136 See http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs_nomenclature_2012.aspx.
162
D. Application of Harmonized System for coding traded goods
13.13. General Rules for the Interpretation. The Harmonized System incorporates a series of
preliminary provisions codifying the principles on which the HS is based and laying down general
rules for ensuring uniform legal interpretation. There are six of these rules, known as the General
Rules for the Interpretation of the Harmonized System, also known as the General Interpretative
Rules (or GIRs), which are applied in hierarchical fashion, i.e., Rule 1 takes precedence over
Rule 2, Rule 2 over Rule 3, etc. Compilers should apply these rules when classifying goods not
classified by customs. An overview of these rules and the classification issues to which they
apply are provided in the boxes below.
Box XIII.2
General Interpretative Rule 1 (GIR 1)
GIR 1: Role of titles of Sections and Chapters and Sub-Chapters
The titles of Sections, Chapters, and Sub-Chapters are provided for ease of reference only; for
legal purposes, classification shall be determined according to the terms of the headings and any
relative Section or Chapter Notes. There are, however, cases where the texts of the headings and
Notes do not, of themselves, determine the appropriate heading with certainty. Classification is
then effected by application of the other Rules.
Box XIII.3
General Interpretative Rule 2 (GIR 2 (a) and GIR 2 (b))
GIR 2 (a): Incomplete or unfinished articles; unassembled or disassembled goods
The scope of any heading which refers to a particular article covers not only the complete article
but also that article incomplete or unfinished, provided that, as presented, it has the essential
character of the complete or finished article. Complete or finished articles presented
unassembled or disassembled, usually presented as such due to the requirements or convenience
of packing, handling or transport, are to be classified in the same heading as the assembled
article. Examples of application:
(a) A machine lacking only a flywheel, a bedplate, calendar rolls, tool holders, etc., is
classified in the same heading as the machine, and not in any separate heading provided for parts.
Similarly, a machine or apparatus normally incorporating an electric motor (e.g.,
electromechanical hand tools of heading 84.67) is classified in the same heading as the
corresponding complete machine even if presented without that motor;
(b) For convenience of transport, many machines and apparatus are transported in an
unassembled state. Although in effect the goods are then a collection of parts, they are classified
as being the machine in question and not in any separate heading for parts. The same applies to
an incomplete machine having the features of the complete machine, presented unassembled.
163
GIR 2 (b): Mixtures or combinations of materials or substances referred to in one heading
The scope of any heading covering certain materials or substances also includes goods consisting
only partly of such materials or substances, unless another heading refers to them in their mixed
or composite state. As a consequence of this rule, mixtures and combinations of materials or
substances, and goods consisting of more than one material or substance, if, prima facie,
classified under two or more headings, must be classified according to the principles of Rule 3.
Box XIII.4
General Interpretative Rule 3 (GIR 3 (a), GIR 3 (b) and GIR (c))
GIR 3 (a): Mixtures, combinations, and goods put up in sets for retail sales, classifiable, prima
facie, under two or more headings
Goods should be classified in the heading giving the most specific description. However, there
is a provision that if two or more headings each refers to only one of the materials or substances
contained in mixed or composite goods, or to only some of the articles included in a set put up
for retail sale, those headings are to be regarded as equally specific in relation to those goods,
even if one of them gives a more complete description than the others. Examples of application:
(a) Tufted textile carpets, identifiable for use in motor cars, which are to be classified not as
accessories of motor cars in heading 87.08 but in heading 57.03, where they are more
specifically described as carpets;
(b) Unframed safety glass consisting of toughened or laminated glass, shaped and
identifiable for use in aeroplanes, which is to be classified not in heading 88.03 as parts of goods
of heading 88.01 or 88.02 but in heading 70.07, where it is more specifically described as safety
glass.
GIR 3 (b): Classification of goods according to the material or component that gives them their
essential character
Covered are such articles as mixed or composite goods, goods consisting of an assembly of
different articles, and goods put up in sets for retail sale. This Rule applies only if Rule 3 (a)
fails. According to this Rule, goods are classified in the heading applicable to the material or
component that gives them their essential character.
Examples of composite goods which can be classified by reference to Rule 3 (b) are:
(a) Ashtrays consisting of a stand incorporating a removable ash bowl;
(b) Household spice racks consisting of a specially designed frame (usually of wood) and
an appropriate number of empty spice jars of suitable shape and size (usually of glass with lids of
plastics or metal).
As a general rule, the components of these composite goods are packaged together.
164
Examples of sets that can be classified by reference to Rule 3 (b) are:
(a) Sets consisting of a sandwich made of beef, with or without cheese, in a bun (heading
16.02), packaged with potato chips (French fries) (heading 20.04): classification in heading
16.02;
(b) Sets, the components of which are intended to be used together in the preparation of a
spaghetti meal, consisting of a packet of uncooked spaghetti (heading 19.02), a sachet of grated
cheese (heading 04.06) and a small tin of tomato sauce (heading 21.03), put in a carton:
classification in heading 19.02;
(c) Hairdressing sets consisting of a pair of electric hair clippers (heading 85.10), a comb
(heading 96.15), a pair of scissors (heading 82.13), a brush (heading 96.03) and a towel of textile
material (heading 63.02), put up in a leather case (heading 42.02): classification in heading
85.10;
(d) Drawing kits comprising a ruler (heading 90.17), a disc calculator (heading 90.17), a
drawing compass (heading 90.17), a pencil (heading 96.09) and a pencil-sharpener (heading
82.14), put in a case of plastic sheeting (heading 42.02): classification in heading 90.17.
GIR 3 (c): Use of the heading last in numerical order
This rule takes effect when goods cannot be classified by application of GIR 3 (a) or GIR 3 (b).
It provides that goods should be classified in the heading which occurs last in numerical order
amongst those which equally merit consideration in determining their classification.
Box XIII.5
General Interpretative Rule 4 (GIR 4)
GIR 4: Goods that are not specifically covered by any heading.
Goods that cannot be classified in accordance with Rules 1 to 3—for example, because they have
newly appeared on the world market, shall be classified in the heading appropriate to the goods
to which they are most akin. Kinship can, of course, depend on many factors, such as
description, character or purpose.
Box XIII.6
General Interpretative Rule 5 (GIR 5 (a) and GIR 5 (b))
GIR 5 (a): Cases, boxes and similar containers, suitable for long-term use and presented with
the articles for which they are intended
These should be classified in the same heading/subheading as the articles for which they are
intended. Examples are: camera cases, musical instrument cases, etc. This rule does not apply to
containers that give the whole its essential character, such as a silver caddy containing tea.
165
GIR 5 (b): Packing materials and packing containers presented with the goods they hold
These are to be classified in the same heading/subheading as the goods they hold. However, this
provision is not binding when such packing materials or packing containers are clearly suitable
for repetitive use.
Box XIII.7
General Interpretative Rule 6 (GIR 6)
GIR 6: Classification in subheadings
Classification in the subheadings of a heading must be determined, mutatis mutandis, with
reference to the principles applicable to classification in the four-digit headings; in any event, the
terms of the subheadings or Subheading Notes must be given precedence. This Rule also
specifies that, for classification purposes, only subheadings of the same level are comparable;
this means that, within a single heading, the choice of a one-dash subheading may be made only
on the basis of the texts of the competing one-dash subheadings; similarly, selection of the
appropriate two-dash subheading, where necessary, may be made only on the basis of the texts of
the subdivisions within the applicable one-dash subheading.
13.14. The Rules establish classification principles that, unless the texts of headings,
subheadings or Section or Chapter Notes otherwise require, are applicable throughout the HS
Nomenclature. Moreover, the Rules clearly provide a step-by-step basis for the classification of
goods within the HS, so that in every case a product must first be classified in its appropriate 4-
digit heading, then in its appropriate one-dash subdivision within that heading, and only
thereafter in its appropriate two-dash subheading within the predetermined one-dash subdivision;
at each step, no account is taken of the terms of any lower-level subdivisions. This principle
applies without exception throughout the HS.
13.15. Settlement of classification disputes. Where a dispute arises between two or more
contracting parties regarding the interpretation or application of the HS, the parties concerned
should, in the first instance, endeavour to reach agreement among themselves. However,
classification disputes that cannot be settled by direct negotiation are referred through the WCO
Secretariat to the Harmonized System Committee (HSC) which, after examination, makes
appropriate recommendations for their solution. If the Committee is unable to settle a dispute, it
refers the issue to the WCO Council for a recommendation on the question. In either event, the
parties to a dispute may agree in advance to accept the recommendation of the Committee or the
Council as binding.
13.16. Use of HS Chapters 98 and 99. The HS considers Chapters 98 and 99 to be reserved for
special use by contracting parties. In practice, there is a tendency for countries to reserve
Chapter 98 for goods that can be classified at the Chapter level of the HS and to use Chapter 99
for recording special transactions and commodity categories not classified according to the HS
(e.g., postal packages not classified according to kind). It is advisable that this practice be
followed by all countries. Compilers are encouraged to code items attributed to Chapters 98 and
99 by applying the formats "98hh" (where ―hh‖ is the code of the HS chapter where goods could
166
have been classified) and "99xxxx" (where ―xxxx‖ is a sequence of digits chosen by a country to
code a particular transaction). In general, it is good practice to limit the use of these Chapters as
much as possible, since the groupings used by countries in these Chapters are usually not
internationally comparable.
Box XIII.8
Examples of the use of chapters 98 and 99 in the Combined Nomenclature (CN) of the
European Union
Chapter 98. This chapter is used to simplify the classification of individual parts of an industrial
plant, i.e., large-scale stationary units producing goods or providing services. The commodity
codes are composed as follows:
The first four digits shall be 9880
The fifth and the sixth digits shall correspond to the CN chapter to which the goods of the
component part belong, the seventh and the eighth digits shall be 0
Chapter 99. This chapter contains codes applicable in intra- and extra-EU trade statistics as
defined by the implementing regulations:
Goods delivered to vessels and aircraft:
9930 24 00: goods from CN chapters 1 to 24
9930 27 00: goods from CN chapter 27
9930 99 00: goods classified elsewhere
Goods delivered to offshore installations:
9931 24 00: goods from CN chapters 1 to 24
9931 27 00: goods from CN chapter 27
9931 99 00: goods classified elsewhere
These codes are mandatory within intra-EU trade. As they are optional within extra-EU trade,
customs authorities of member States may choose not to apply them.
Trade under military secrecy:
9999xx99 (xx is the CN Chapter)
9999xxxx (xxxx is the HS-4 code).
These codes are not specified in the legislation and should be provided to Eurostat only in
exceptional cases. The real CN code is preferred to be transmitted by Member States.
Codes applicable to Intrastat only:
Low-value transactions and trade under the simplification threshold (for residual products
only): 9950 00 00
Parts for motor vehicles: 9990 87 zz (zz according to national purposes)
Parts for aircraft: 9990 88 zz (zz according to national purposes)
Codes to be used only on customs declaration: Certain goods, that are not subject to duties or
other prohibitions or restrictions:
9905 00 00 for personal property belonging to natural persons transferring their normal place
of residence
167
9919 00 00 for the following goods, other than those mentioned in 9905 00 00:
(a) Trousseaux and household effects belonging to a person transferring his or her normal place
of residence on the occasion of his or her marriage; personal property acquired by inheritance
(b) School outfits, educational materials and related household effects
(c) Coffins containing bodies, funerary urns containing the ashes of deceased persons and
ornamental funerary articles
(d) Goods for charitable or philanthropic organisations and goods for the benefit of disaster
victims
As these codes are optional, customs authorities of member States may choose not to apply them.
E. Measures to ensure proper classification
13.17. Knowledge of compilers about the HS. It is good practice for compilers to have a close
dialogue with customs on implementation of the HS, and familiarize themselves with the HS so
that they can review, for statistical purposes, classification assignments made by customs and
assign appropriate HS codes to commodities not labelled by customs.
13.18. Measures to ensure proper classification. Goods need to be properly classified in the
HS, not only in order to ensure effective revenue collection, but also for the compilation of
consistent international trade statistics. The HS, when incorporated in the national tariff,
becomes a national law. Correct goods classification is a legal obligation of declarants and
entering wrong codes in the goods declaration may entail legal consequences. It is good practice
for compilers of trade statistics to cooperate with customs administrations in efforts to provide
training and assistance to declarants in the business community, and to increase their awareness
regarding their obligations and the importance of properly classifying goods for policy and
analytical purposes.
13.19. Training and tools for customs officers and traders. Another important means of ensuring
proper goods classification is organizing training for customs officers, traders and trade
statisticians in the application of the HS. It is advised that statistical offices, in cooperation with
customs, develop appropriate training programmes and conduct training seminars and workshops
on a regular basis. It is also advised that trade data compilers periodically undertake special
studies to assess the accuracy of the classification decisions and discuss their results with
customs authorities. These studies may focus on the most frequently exported or imported goods
or on traders with a significant share in total country exports or imports. Also, appropriate
assistance and tools for assigning the appropriate HS code should be made available to customs
officers and the business community.
13.20. WCO measures to improve the quality of classification decisions. As part of the technical
assistance programme of its Nomenclature and Classification Sub-Directorate, WCO periodically
conducts regional training seminars to enhance the classification skills of local customs
personnel. At such seminars, classification principles are reviewed and practice is provided in
classifying a sample of goods. Unresolved classification questions raised during such seminars
may be forwarded to the Secretariat, which prepares an answer. If the contracting party does not
agree with the answer, it can ask that the matter be referred to the Harmonized System
Committee for resolution. WCO has also assisted customs offices in establishing customs
168
laboratories to which goods may be sent when technical data are required for proper
classification (see para. 13.21 below). In addition, representatives of intergovernmental and
other international organizations are often invited to be present at Committee meetings, where
they are able to make the Committee aware of the need for new elements in the classification, of
industry practices that affect classification (e.g., the use of an unusual form of measurement, or a
particular means of distinguishing quality, with regard to a given commodity) and of difficulties
that traders experience in classifying certain goods.
13.21. Customs laboratories. One important measure that has been helpful in assisting
declarants is the establishment of customs laboratories. The technical nature of classification
work often demands laboratory analysis of certain products to enable their correct HS
classification. Customs laboratories are able to establish an efficient system within which
samples of goods for analysis are sent to the laboratory, where prompt and relevant analyses of
such samples are performed and results are expeditiously reported. The WCO has prepared a
―Customs laboratory guide‖137
to serve as a practical handbook to establish or improve customs
laboratories in developing countries.
F. Country experiences in the use of HS
13.22. Benefits and challenges associated with the use of the HS. The HS has been in use since
1988. During this period, both benefits and challenges associated with its use became apparent.
Compilers should be aware of them in order to enjoy the benefits to the maximum extent
possible, while properly dealing with the challenges presented by its application, e.g., through
the use of other classifications more suitable for particular needs (see chap. XXVII).
13.23. Benefits of using the HS. The HS is the only commodity classification recommended by
the United Nations Statistical Commission for the collection and compilation of international
merchandise trade statistics. It is also widely used for dissemination and analysis of these
statistics for the following reasons:
(a) The HS encompasses a legal text and extensive explanatory notes which ensure the
maximum possible uniformity in the interpretation of the definitions of commodity groups, thus
creating a universal language applicable both in commercial practice and in trade negotiations;
(b) The HS enables international comparability of trade statistics at the six-digit level,
facilitating detailed analysis of international trade and its role in the globalization of national
economies;138
(c) The universal application of the HS allows the conduct of effective trade data
reconciliation studies;
(d) As the HS contains detailed descriptions of commodities, its headings and sub-headings
can be used as the building blocks of other product classifications;
137
World Customs Organization (Brussels, September 2002).
138 In this connection, it should be stressed that countries should avoid the use of simplified classification decisions
as much as possible even if certain customs procedures and thresholds allow this.
169
(e) The HS Convention allows each country to introduce its own level of statistical detail
beyond the six-digit level, thus providing the necessary flexibility in accommodating national
needs;
(f) The establishment of data conversions from the HS to other classification and its
widespread use in data collection allow information for various purposes to be easily provided
(see chap. XXVII).
13.24. Challenges in the implementation and use of the HS. The most frequently cited
challenges in the use of the HS include the following:
(a) The HS is relatively complex and difficult to implement without very extensive training,
e.g., so as to avoid serious classification errors. Also, the HS Explanatory Notes, which are
critical for classification guidance, are not cost-free, which may reduce the extent of their use by
trade analysts;
(b) The HS does not provide stand-alone descriptors of its six-digit codes which can be
used as metadata in trade statistics databases and publications; this leads to duplicative work, as
many countries and international organizations develop such descriptors (see box XIII.10) ; 139
(c) Definition of commodity groups in the HS is not always satisfactory for economic
analysis, and it is therefore necessary to develop various analytical classifications (see chap.
XXVII);
(d) Commodities are not always classified in such a way as to reflect countries
circumstances and statistical priorities, particularly at the most detailed levels of classification.
Many countries further divide HS subheadings to provide the detail required for tariff and
statistical purposes; sometimes, countries use alternative groupings for certain commodities
which better suit their analytical needs;
(e) As part of the application of the HS, WCO recommends the use of certain standard units
of quantity for the six-digit HS level (see chap. XV for details). However, the recommended
units of quantity are not always indicative of the quantity units used in industry practices (they
might be different across countries), which in certain cases creates additional difficulties in HS
implementation and analytical use;140
(f) Frequent revisions of the HS result in the discontinuation or merging of some codes
every five years. This causes breaks in time series needed for analytical purposes.
13.25. It is recognized that, to a large degree, most of the challenges listed above are inherent
and unavoidable in any multipurpose international commodity classification. Countries are
advised to build upon the strengths of the HS while minimizing it weaknesses, e.g., by providing
more detailed commodity breakdowns beyond the six-digit HS-level. Also, it is good practice to
use other product classifications such as the Standard International Trade Classification (SITC),
the Central Product Classification (CPC), and the Classification by Broad Economic Categories
(BEC), as well as the International Standard Industrial Classification of All Economic Activities
139
Countries are advised to consult the WCO website for additional materials on such descriptors.
140 For example, natural gas traders work in British thermal units (BTUs), rather than in cubic metres (m
3). This is
also particularly true in the textiles area.
170
(ISIC), as applicable (see chap. XXVII for details).
Box XIII.9
European Union experience in the development and use of the Combined Nomenclature
The Combined Nomenclature (CN) was established by Council Regulation (EEC) No. 2658/87
of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff. It
ensures that requirements of the Common Customs Tariff, and the external trade statistics, as
well as other EU policies concerning the importation or exportation of goods, are met at one and
the same time.
The CN is a further breakdown of the Harmonized System which introduces eight-digit codes
below the six-digit level of HS. These eight-digit codes are referred to as ―CN subheadings‖,
and are created in those cases where a corresponding rate of duty is specified. When a HS
heading or subheading is not further subdivided for European Union purposes, the seventh and
eighth digits are ‗00'.
The CN comprises also preliminary provisions, as well as additional section or chapter notes
and footnotes relating to CN subheadings.
The Combined Nomenclature is reproduced in Annex I of the above mentioned Council
Regulation. The rates of duty of the Common Customs Tariff and, where applicable, the
supplementary statistical units, as well as other necessary information, are laid down in that
Annex.
The CN codes as well as the supplementary units are revised on an annual basis, amending
Annex I through a Commission Regulation reproducing the complete version of the CN. As a
result, CN codes are created, deleted or merged in order to:
Take into account changes in requirements relating to statistics or to commercial policy
Take into account technological or commercial developments
Align or clarify texts
Introduce the changes of the HS
The said Commission Regulation shall be published not later than 31 October in the Official
Journal of the European Union and it shall apply from 1 January of the following year.
To assist in classifying commodities, CN Explanatory Notes are produced on an adhoc basis,
although they are not legally binding.
Box XIII.10
Stand-alone commodity descriptors: Canada
Merchandise trade data disseminated by Statistics Canada is often supplied with ―stand-
alone‖ descriptors designed to identify the commodities of a particular data series. While trade
data is collected using the Harmonized System (HS), the HS descriptors are not always suitable
for publication purposes. The length of the legal HS descriptors and the use of ―Other‖ or
―Other–Other‖ often do not provide meaningful labels for disseminated data. For example, the
Canadian Customs Tariff contains the following descriptors:
- Reception apparatus for television, whether or not incorporating radio-broadcast receivers
or sound or video recording or reproducing apparatus:
8528.72 - - Other, colour
8528.72.20.00 - - - Incomplete or unfinished television receivers, including assemblies for
television receivers consisting of video intermediate (IF) amplifying and detecting systems,
171
video processing and amplification systems, synchronizing and deflection circuitry, tuners and
tuner control systems, and audio detection and amplification systems plus a power supply, but
not incorporating a cathode-ray tube, flat panel screen or similar display.
This has been shortened, through the use of a Statistics Canada stand-alone descriptor, to
―Television receivers, colour, incomplete or unfinished‖.
Data users are advised that these stand-alone descriptors are for dissemination purposes only
and have no legal standing. While they are not as precise as the legal descriptors, they do enable
an easier understanding of the basic data series.
Box XIII.11
Relationship between HS, the European Union Combined Nomenclature and other
international classifications relevant to trade statistics
The following schema illustrates how various international, European and national classifications
relevant to trade statistics relate to each other. Each arrow indicates a relationship between a
reference classification and a derived classification (to which it points). Solid arrows indicate
classifications linked by structure. Dotted arrows and lines indicate classifications linked
through conversion tables.
World level
European Unionlevel
National level
EconomicActivities Products Goods
ISIC CPC HS SITC
CNPRODCOMCPANACE
Nationalversionsof NACE
Nationalversionsof CPA
Nationalversions
of PRODCOM
Abbreviations:
ISIC: International Standard Industrial Classification of all Economic Activities
NACE: Statistical Classification of Economic Activities in the European Community
CPC: Central Product Classification
CPA: Classification of Products by Activity
HS: Harmonized Commodity Description and Coding System
CN: Combined Nomenclature
SITC: Standard International Trade Classification
PRODCOM: Classification of goods used for collection and dissemination of statistics on
industrial production in the European Union.
173
Chapter XIV
Valuation
14.1. Introduction. The present chapter elaborates on the recommendations and expressions of
encouragement contained in IMTS 2010 (chap. IV), on valuation. It contains details on the
compilation of the statistical value of both the cost, insurance, freight (CIF) and the free on board
(FOB) types of value, based on the invoice price and terms of delivery (using Incoterms
2010).141
Further additional guidance is provided on the valuation of selected categories of goods
and issues of currency conversion.
A. Statistical value and its components: an overview
14.2. Statistical value. IMTS 2010 (para. 4.1) recommends that for all goods covered in
international merchandise trade statistics, whether sold, exchanged or provided without payment,
a statistical value should be recorded. IMTS 2010 (para. 4.8) further recommends that the
statistical value of exported goods be a FOB-type value and the statistical value of imported
goods be a CIF-type value. Countries are encouraged to compile FOB-type value of imported
goods as supplementary information. The statistical value is defined in terms of three
components: (a) the transaction value of the goods, (b) the value of services performed to deliver
the goods to the border of the exporting country that is not already included in the transaction
value and (c) the value of the services performed to deliver the goods from the border of the
exporting country to the border of the importing country that is not already included in the
transaction value. FOB-type value comprises components (a) and (b), while CIF-type value
comprises the sum of (a), (b) and (c).
14.3. Need to consider all appropriate sources of information. The recommendations imply
that compilers should develop statistical procedures to make use of all of the price and value
information available in customs records, other administrative sources and commercial
documents and to estimate the statistical value of goods where such information is not provided
or appears inaccurate. In order to obtain the statistical value of the goods, compilers should have
a clear understanding of the basic concepts relevant to the valuation as well as a knowledge of
the advantages and limitations of various data sources.
14.4. Definition of transaction value. IMTS 2010 (annex D, para. D.1) recommends that the
transaction value of the goods should be established in accordance with the World Trade
141
Incoterms provide a set of international rules for the interpretation of the most commonly used trade terms in
foreign trade. Successive revisions of Incoterms have been introduced by the International Chamber of Commerce
(ICC) to adapt them to contemporary commercial practice, including Incoterms 2000 (endorsed by the United
Nations Commission on International Trade Law) and Incoterms 2010 (which went into effect on 1 January 2011).
Incoterms 2010 defines 11 terms of delivery: ex works (EXW), free carrier (FCA), carriage paid to (CPT), carriage
and insurance paid to (CIP), delivered at terminal (DAT), delivered at place (DAP), delivered duty paid (DDP), free
alongside ship (FAS), free on board (FOB), cost and freight (CFR) and cost, insurance and freight (CIF). For details
on Incoterms 2000, see the report of the Secretary-General of the United Nations on ICC INCOTERMS 2000
(A/CN.9/479). Available from http://www.uncitral.org/uncitral/en/commission/sessions/33rd.html. Further
information on Incoterms 2010 is available from the ICC website (http://www.iccwbo.org/incoterms/), as well as in
annex E of IMTS 2010.
174
Organization Agreement on Customs Valuation,142
which in its article 1 defines it as ―the price
actually paid or payable for the goods when sold for export to the country of importation
adjusted in accordance with the provisions of Article 8. This price is to be calculated as ―the total
payment made or to be made by the buyer or for the benefit of the seller for the imported
goods‖;143
payments can be monetary or ―in the form of specified goods or services‖.144
The
compiler should be aware that the total payment made or to be made by the buyer or for the
benefit of the seller for the imported goods according to Article 8 of the Agreement should
include only the following items to the extent that they are incurred by the buyer but are not
included in the price actually paid or payable for the goods:
(a) Commissions and brokerage, except buying commissions145
;
(b) The cost of containers which are treated as being one for customs purposes with the
goods in question;
(c) The cost of packing whether for labour or materials;
(d) The value, apportioned as appropriate, of the goods and services supplied directly or
indirectly by the buyer free of charge or at reduced cost for use in connection with the production
and sale for export of the imported goods, to the extent that such value has not been included in
the price actually paid or payable:
(e) Royalties and license fees related to the goods being valued that the buyer must pay,
either directly or indirectly, as a condition of sale of the goods being valued, to the extent that
such royalties and fees are not included in the price actually paid or payable;
(f) The value of any part of the proceeds of any subsequent resale, disposal or use of the
imported goods that accrues directly or indirectly to the seller.
(g) Any costs incurred by the seller associated with goods delivery to the buyer and which
the buyer agrees to pay, can be part of transaction value (e.g., export taxes and duties).
14.5. The Agreement covers only the case of imported goods subject to ad valorem duties.
However, IMTS 2010 (para. 4.4) recommends that, for statistical purposes, the transaction value
of all imported and exported goods should be established on the basis of the Agreement.
14.6. Relationships between transaction value, customs value and statistical value. Compilers
should be aware of the fact that the WTO Agreement on Valuation defines customs value as
transaction value, but gives customs authorities flexibility in determining its components.
Countries are free to include in or exclude from the customs value, in whole or in part: (a) the
142
See Legal Instruments Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations: done at
Marrakesh on 15 April 1994 (GATT secretariat publication, Sales No. GATT/1994-7). Available from
www.wto.org/english/docs_e/legal_e/legal_e.htm#artvii.
143 Agreement on Customs Valuation, Annex 1, Note to Article 1, para. 1.
144 Ibid., General Introductory Commentary, para. 1.
145 Buying commissions are the fees paid by the buyer to a bona fide buying agent (a third party acting as an
intermediary on behalf of the buyer) for its services in connection with the purchase of an imported good. Typically,
the commission is equal to an agreed-upon percentage of the price of the goods. See, e.g., United States Customs
and Border Protection (2006), ―Buying and Selling Commissions‖.
175
cost of transport of the imported goods to the port or place of importation; (b) loading, unloading
and handling charges associated with the transport of the imported goods to the port or place of
importation; and (c) the cost of insurance (see article 8, para. 2). This means that, depending on
the country customs practice, the transaction value can be defined differently and cover partially
or wholly the cost of services performed to deliver the goods from their location in the exporting
country to the border of the importing country.
14.7. Customs rules may require that the transaction value of imported goods includes all cost
components of CIF-type value and that the transaction value of exported goods include all
components of FOB-type value. Whenever this is the case, it is good practice to accept the
customs value as the statistical value. In all other cases, compilers should make the necessary
adjustments to the available customs values as set out in Article 8.1 of the WTO Agreement on
Valuation, including adjustments concerning insurance and freight. If the required information is
not available or does not exist (e.g., where goods cross the border without being sold, as is the
case for food and other humanitarian aid), the statistical value should be estimated using
valuation principles contained in IMTS 2010, chapter IV, and as set out below.
14.8. Statistical value and invoice price. These are two different concepts. The invoice price
represents an expected direct monetary payment to the seller and may not take account of other
payments (both monetary and non-monetary) which should be included in or excluded from the
transaction value. Therefore, the invoice price is usually only a starting point for the derivation
of the customs and/or statistical values and has to be adjusted as necessary. The invoice price
may not be acceptable for this purpose if the conditions of Article 1 of the WTO Agreement on
Customs Valuation are violated (e.g., if the buyer is precluded by the seller from reselling the
goods), in which case the transaction value should be determined on another basis provided for
in the Agreement. Further, the invoice value depends on the terms of delivery of the goods and
may include various service components conceptually covered in items (b) and (c) of para. 14.2
above. Therefore, it is very important that when estimating the statistical value, compilers have
information about the delivery terms, so that the specific items and their costs included or not
included in the invoice price can be identified and compilers are in a position to make the
calculations needed to obtain the recommended statistical value (see sects. B and C).
14.9. The value of service components. The services rendered in the delivery of goods to the
border of the exporting or importing country include, for example, loading and unloading of the
goods, fulfillment of the customs formalities such as clearing goods for exportation and paying
applicable taxes and duties, transportation, and insurance. They may or may not be included in
the invoice price and, in many cases, they should be evaluated with respect to their inclusion in
or exclusion from the invoice price in order to obtain the required statistical value. It is advised
that compilers apply generally accepted accounting principles which would allow the
establishment of the value of these services, and follow broadly, in this regard, the definition of
the transaction value of goods as provided in the WTO Agreement on Customs Valuation. It is
further advised that the guidelines of the 2008 SNA and BPM6 on valuation of services be taken
into account, whenever appropriate.146
146
See the 2008 SNA, paras. 3.118-3.150; and BPM6, paras. 3.68-3.80.
176
14.10. List of cost items relevant for the determination of the statistical value. The main cost
items relevant for the determination of the statistical value of the goods for purposes of
international merchandise trade statistics are:
(a) Cost of the goods at ―factory‖ gates;
(b) Cost of loading on internal transport;
(c) Cost of transportation from seller‘s warehouse to main carrier (including container
stuffing costs);
(d) Cost of insurance to border of exporting country;
(e) Contract of carriage, trade documents in exporting country;
(f) Cost of loading on main carrier (including transport and warehouse port costs);
(g) Cost of customs clearance at exportation, including any export duties and other charges;
(h) Cost of international carriage to border of importing country;
(i) Cost of insurance while in international carriage;
(j) Cost of customs clearance at importation, including import duties and other charges;
(k) Cost of unloading at the port of importation (including transport and warehouse port
costs);
(l) Cost of transportation in the importing country (including container un-stuffing costs);
(m) Cost of insurance while in transport in the importing country;
(n) Cost of unloading at the buyer‘s warehouse.
B. Compilation of the statistical value of imported goods
14.11. Use of customs value as the statistical value. If the customs value is determined in
conformity with the WTO Agreement on Customs Valuation, the statistical value of imported
goods either is equivalent to the customs value or can be derived from it by adding the cost of
certain services, pursuant to article 8 (2) of the WTO Agreement. The consequence of this
provision in article 8 is that the customs value of imported goods may or may not cover the value
of all the services required for inclusion in the statistical value of imported goods, e.g., it may or
may not include insurance and freight. If a country chooses to include all of the required cost
items in the customs value, then the customs value will be the statistical value. Otherwise,
compilers need to add the costs (possibly estimated) of these services to the customs value in
order to obtain the statistical value.
14.12. Use of customs value if the terms of delivery are CIF or CIP. The customs value for
imports should be accepted as the statistical value without any adjustments if:
(a) The customs value was established in accordance with articles 1-8 of the WTO
Agreement;
177
(b) The terms of goods delivery are CIF or CIP,147
and none of the exclusions from the
customs value allowed in article 8 (2) were made.
14.13. Use of the customs value if the terms of delivery are other than CIF/CIP. The terms of
goods delivery may be other than CIF or CIP. In these cases, the customs value should be
accepted as the statistical value, provided that the appropriate adjustments to the invoice price
were made by customs or the trader. Compilers should confirm with customs authorities that, if
the terms of delivery are other than CIF/CIP, the customs value includes the value of the services
covered by the definition of CIF-type statistical value and that it excludes any other costs. The
required adjustments to the invoice price are outlined and further explained in table XIV.1
below.
14.14. Declaration of the customs value. It is the responsibility of customs to ensure the proper
calculation of the customs value. To ensure accuracy, many countries require the importer to
complete a special form, the declaration of the customs value. This declaration identifies the
cost components that are included in the customs value, depending on the terms of delivery. If
such a declaration is available, it is good practice, in the case of high-value shipments, to review
the cost components listed in it in order assess whether any adjustments to the customs value are
necessary. It is also advised that compilers cooperate with customs in efforts to improve the
reliability of the valuation procedures.
14.15. Compilation of the statistical value in the absence of the customs value. If the customs
value deviates from the requirements of the WTO Agreement or if there is no customs value,
compilers should derive or estimate the statistical value following the principles of the WTO
Agreement. Part I of the WTO Agreement is reproduced in annex D of IMTS 2010.
14.16. Adjustments to the invoice value of imported goods depending on the terms of delivery.
Customs administrations generally require the FOB- or CIF-type value to be placed on the
customs declarations by traders or, if necessary, calculate those values themselves based on the
various documents submitted by traders. Such supporting documents may include the contract of
sale, which would normally contain the terms of delivery of goods and the price of the goods,
and the invoice issued to the buyer by the seller of the goods. The price of the goods negotiated
between traders and reflected in the invoice (also referred to as the invoice price) depends on the
terms of delivery. The terms of delivery constitute an agreement between the seller and the buyer
on who is responsible for the cost and risk of delivering the goods to the agreed place. Terms of
delivery used in international commerce include those of the FOB and CIF types, as defined by
the International Chamber of Commerce and described in annex E of IMTS 2010. Compilers
have to make appropriate adjustments to the invoice price to obtain CIF- or FOB-type values of
goods if such values are not available from customs or other sources.
14.17. Table XIV.1 describes the various terms of delivery (right-hand column headings) in
terms of a list of cost items that need to be added to or subtracted from the invoice price (left-
hand column) to obtain the CIF-type value of imported goods. The list of cost items is
147
The Incoterm CIP (Carriage and Insurance Paid to) rule is the containerized transport/multimodal equivalent of
the CIF rule.
178
indicative, and may not be applicable in all cases. The content of a cost item as well as its
inclusion in or exclusion from the invoice price might differ from one transaction to another
depending on national legal requirements and on the contractual agreements between the parties.
(For the purposes of tables XIV.1-XIV.3, it is assumed that the cost of the goods at the factory
gate are included in the invoice price.) The CIF column of the table identifies (with a boldface
―Y‖) cost items that are covered by the definition of CIF-type value, and which are assumed to
be normally included in the invoice price of imported goods when delivered under those terms.
The other columns in the table identify whether a cost item is assumed (a) to be included in the
invoice price when the goods are delivered under those terms, with no adjustment needed
(indicated by the symbol ―*‖), (b) to be excluded from the invoice price and added to it
(indicated by the symbol ―+‖) or (c) to be included in the invoice price and to be subtracted from
it (indicated by the symbol ―−‖). An empty cell indicates that the item is assumed to be excluded
from the invoice value and therefore from the CIF- or FOB-type values as well. If, in a
particular case, an assumption regarding inclusion or exclusion of any cost item in the invoice
price is not correct, then that item should be subtracted or added, as appropriate. The term
―FCA‖ appears as ―FCA/x‖ to indicate that it is to be interpreted as FCA, border of exporting
country.
14.18. The use of table XIV.1 can be illustrated as follows. If, for example, goods are imported
under the terms of DDP (delivered duty paid to buyer‘s warehouse), then the insurance while in
international transport should be added; however, the cost of customs clearance at importation,
including import duties and other charges, cost of transportation in the importing country and
cost of insurance while in transport in the importing country, and the cost of unloading at the
buyer's warehouse, should all be subtracted from the invoice price to obtain a CIF-type value, as
recommended for import statistics.
179
Table XIV.1
Adjustments to the invoice price required to obtain CIF-type value of imported goods
Cost item
Terms of delivery
C
I
F
E
X
W
F
C
A
/x
F
A
S
F
O
B
C
F
R
C
P
T
C
I
P
D
A
T
D
A
P
D
D
P
Costs in exporting country
1. Cost of loading on internal transport Y + * * * * * * * * *
2. Cost of transportation from seller‘s warehouse
to main carrier (including container stuffing costs) Y + * * * * * * * * *
3. Cost of insurance to border of exporting country Y + * * * * * * * * *
4. Contract of carriage, trade documents in
exporting country Y + * + * * * * * * *
5. Cost of loading on main carrier (including
transport and warehouse port costs) Y + + + *
a * * * * * *
6. Cost of customs clearance at exportation,
including any export duties and other charges Y + * + * * * * * * *
Main carriage
7. Cost of international carriage to border of
importing country Y + + + + * * * * * *
8. Cost of insurance while in international carriage Y + + + + + + * + + +
Costs in importing country
9. Cost of customs clearance at importation,
including import duties and other charges
−
10. Cost of unloading at the port of importation
(including transport and warehouse port costs)
Yb + + + + * * * * + *
11. Cost of transportation in the importing country
(including container un-stuffing costs)
−
12. Cost of insurance while in transport in the
importing country
−
13. Cost of unloading at the buyer‘s warehouse − Abbreviations: CIF: cost, insurance, fright; EXW: ex works; FCA: free carrier; FAS: free alongside ship; FOB: free on
board; CFR: cost and freight; CPT: carriage paid to; CIP: carriage and insurance paid to; DAT: delivered at terminal;
DAP: Delivered at place; and DDP: delivered duty paid.
Note: ―Y‖ signifies that a cost item is covered by the definition of CIF-type value and is normally included in the invoice
price when delivered under CIF terms. An asterisk (*) signifies that the cost item is normally included in the invoice price
when the goods are delivered under the terms indicated by the column heading, with no adjustment needed. A plus sign
(+) signifies that the cost item is excluded from the invoice price and is to be added. A minus sign (−) signifies that the
cost item is included in the invoice price and is to be subtracted. a Under the FOB term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value of the goods. Since the loading of goods on board a ship is required to make the goods available to the
buyer in the importing country, its cost should be fully included in the CIF-type statistical value of imported goods. b Under the CIF term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value. Since the unloading of goods in the port of importation is required to make the goods available to the buyer
in the importing country, its cost should be fully included in the CIF-type statistical value of imported goods.
180
14.19. Establishing the statistical value of imported goods. Commercial practices in
international merchandise trade display a variety of detail in the terms of delivery of goods.
Statisticians should carefully examine the available data sources and information, including the
terms of delivery of goods, in order to derive the recommended CIF-type values. In addition,
they should establish a close cooperation with customs and other primary data collectors in order
to provide guidance on the methodology regarding the statistical value and to ensure the
availability of adequate data.
C. Emerging good practices in the compilation of free on board (FOB)-type value of imported
goods
14.20. A number of countries compile FOB-type value of imported goods on a regular basis. An
example of how this is done is provided in box XIV.1 below.
Box XIV.1
The practice of the Philippines in computing the FOB value of imports
The valuation of imports in its monthly releases in the Philippines is in terms of FOB value. The
final publication for imports, however, consists of both FOB and CIF.
The FOB value is computed in two ways. First, the terms of delivery or Incoterms in box 20 of
the Import Entry and Internal Revenue Declaration Form (IERD) is checked. If the entry in box
20 is FOB, the value is simply copied. If the terms of delivery is CFR, the FOB value is
computed by subtracting the Freight value which is found in box 9a of the IERD. If the terms of
delivery are CIF, the FOB value is computed by subtracting the sum of the freight value (box 9a)
and the insurance value (Box 9b).
Another way to compute the FOB value is as follows: FOB value = Dutiable value in pesos (box
46)/Exchange rate (box 23) – [Freight value (box 9a) + Insurance value (box 9b)]
14.21. Adjustments to invoice value to obtain FOB-type value of imported goods. Table XIV.2
provides guidance on the adjustments to invoice price that are required to obtain the FOB-type
value of imported goods. (See para. 14.17 for explanation of the notation used in Table 14.2)
14.22. Estimation of FOB value of imports from alternative data sources. In cases where FOB
values are not available from the primary trade data source, they can be estimated using actual or
estimated freight and insurance costs for transactions that are provided by traders on
declarations, supplemented by information on freight and insurance rates from providers of those
services. Further, CIF/FOB adjustment factors could be obtained for a sample of imports through
supplementary surveys of importers. The sample could be selected from the imports
declarations, with information on importers‘ names and contact addresses being the basis for the
survey. Another possibility is to obtain information on the exported value in cooperation with
authorities in the exporting countries, if processing systems and confidentiality rules allow
declarations to be accessed.
181
Table XIV.2
Adjustments to the invoice price required to obtain FOB-type value of imported goods
Cost items
Terms of delivery
F
O
B
E
X
W
F
C
A
/x
F
A
S
C
F
R
C
I
F
C
P
T
C
I
P
D
A
T
D
A
P
D
D
P
Costs in exporting country
1. Cost of loading on internal transport Y + * * * * * * * * *
2. Cost of transportation from seller‘s
warehouse to main carrier (including container
stuffing costs)
Y + * * * * * * * * *
3. Cost of insurance to border of exporting
country Y + * * * * * * * * *
4. Contract of carriage, trade documents in
exporting country Y + * + * * * * * * *
5. Cost of loading on main carrier (including
transport and warehouse port costs)
Ya
+ + + * * * * * * *
6. Cost of customs clearance at exportation,
including any export duties and other charges Y + * * * * * * * * *
Main carriage
7. Cost of international carriage to border of
importing country
− − − − − −
8. Cost of insurance while in international
carriage − − −
Costs in importing country
9. Cost of customs clearance at importation,
including import duties and other charges
−
10. Cost of unloading at the port of importation
(including transport and warehouse port costs) − −
b − − −
11. Cost of transportation in the importing
country (including container un-stuffing costs)
−
12. Cost of insurance while in transport in the
importing country
−
13. Cost of unloading at the buyer‘s warehouse − Abbreviations: CIF: cost, insurance, fright; EXW: ex works; FCA: free carrier; FAS: free alongside ship; FOB: free on
board; CFR: cost and freight; CPT: carriage paid to; CIP: carriage and insurance paid to; DAT: delivered at terminal;
DAP: Delivered at place; and DDP: delivered duty paid.
Note: ―Y‖ signifies that a cost item is covered by the definition of FOB-type value and normally included in the invoice
price when delivered under FOB terms. An asterisk (*) signifies that the cost item is normally included in the invoice
price, when the goods are delivered under the terms indicated by the columns heading, with no adjustment needed. A plus
sign (+) signifies that the cost item is excluded from the invoice price and is to be added. A minus sign (−) signifies that
the cost item is included in the invoice price and is to be subtracted. a Under the FOB term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value of the goods. However, it should be fully included in the FOB-type statistical value of imported goods. b Under the CIF term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value. However, it should be fully excluded from the FOB-type statistical value of imported goods.
182
14.23. Adjustment factors. If it is not possible to calculate the FOB value of imports directly,
adjustment factors can be derived. The allocation of work in this area between trade statistics and
balance-of-payments compilers will depend on national circumstances, but the interlinked nature
of the tasks means that there should be close cooperation. As freight and insurance costs vary
with factors such as the commodities involved, mode of transport, size of consignment, and
distance between ports, adjustment factors should be derived in some detail, for example, by
country, product and mode of transport. To the extent that the costs vary over time and with the
mix of products, they will need to be updated frequently. For adjustment factors from samples,
the degree of detail is likely to be considerably less than is possible with complete coverage from
customs declarations. Adjustment factors are usually expressed as percentages of trade values,
but this is only an approximation, as some costs relate to weight or volume rather than to value.
In addition, the relative prices of the good and its transport costs might move in different ways
(for example, if metal prices fall, there is no reason to expect that freight costs will also fall).
The insurance companies that insure goods when they leave a country are possible sources of
information on insurance costs.
D. Compilation of statistical values of exported goods
14.24. Use of customs value as the statistical value. The customs value and the statistical value
of both imported and exported goods should be consistent. In this connection, IMTS 2010 (para.
4.4) recommends that countries adopt the WTO Agreement on Customs Valuation as the basis
for valuation of all goods flows. This approach builds on article VII of the General Agreement
on Tariffs and Trade (GATT),148
which requires that the same principles of valuation should
apply to valuation of both imported and exported goods. However, there is no international
agreement on the implementation of article VII of the GATT with respect to the customs value of
exported goods. IMTS 2010 recommends that an FOB-type value be used as the statistical value
of exported goods.
14.25. Customs administrations enjoy freedom of interpretation in respect of how the customs
value of exported goods should be determined. In general, customs requires that actual prices
paid for the goods and costs of delivery to the border be declared, so that an FOB-type customs
value can be established. In the absence of price information, customs might require certain
substitutes such as the prices of identical or similar goods. The degree of verification of
accuracy of the information provided by declarants depends in part on whether or not customs
values are used for assessing export duties and other related charges. Countries may also have
different interpretations of the term ―costs of delivery to the border of the exporting country‖.
For example, some countries do not include in this item the cost of inland insurance.
14.26. Ensuring accuracy and comparability in valuation of exports. As in many countries the
customs valuation of exported goods is less regulated than valuation of imported goods, it is a
good practice to make special efforts to assess the compatibility of customs practices of valuation
of exported goods with statistical requirements. It is further advised that if customs values of
economically significant shipments of goods, when established, clearly deviate from those
148
See Legal Instruments Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, done at
Marrakesh on 15 April 1994 (GATT secretariat publication, Sales No. GATT/1994-7).
183
requirements, these customs values be replaced, for statistical purpose, by values derived from
non-customs sources or by estimated values (e.g., based on the value of identical or similar
goods, if deemed more accurate). Compilers are encouraged to contact exporters of major
commodities and, if necessary, to conduct special studies to determine the statistical value on the
basis of cost of production, including cost of materials, compensation of employees and other
relevant information.
14.27. Use of the customs value if the terms of delivery are FOB or FCA. The customs value for
exports should be accepted as the statistical value, without adjustment (a) if the transaction value
was established in accordance with articles 1 - 8 of the WTO Agreement and (b) provided that
the terms of delivery were (i) free on board (FOB)149
at port on the frontier of the exporting
country (for goods dispatched by sea or inland waterway) or (ii) free carrier (FCA) at terminal on
the frontier of the exporting country (for goods dispatched by means of transport to which FOB
is not applicable).
14.28. Use of the customs value if the terms of delivery are other than FOB or FCA. In such
cases, the customs value should be accepted as the statistical value, provided that appropriate
adjustments were made to the invoice value. If the terms of delivery are other than FOB or FCA,
compilers should ascertain whether the customs value includes the value of the services covered
by the definition of statistical value and that it excludes any other costs. An outline of the
required adjustments to the invoice price is contained in table XIV.3, below150
(see para. 14.17
for explanation an of the notation used in table XIV.2).
149
If the term ―delivered at frontier‖ (DAF), as defined in Incoterms 2000, is applied, then the customs value can
also be accepted as the statistical value.
150 It should be noted that table XIV.3 is identical to table XIV.2, as the FOB-type statistical value of exported and
imported goods is compiled with reference to the same point of valuation: the border of the exporting country.
184
Table XIV.3
Adjustments to the invoice price required to obtain FOB-type value of exported goods
Cost items
Terms of delivery
F
O
B
E
X
W
F
C
A
/
x
F
A
S
C
F
R
C
I
F
C
P
T
C
I
P
D
A
T
D
A
P
D
D
P
Costs in exporting country
1. Cost of loading on internal transport Y + * * * * * * * * *
2. Cost of transportation from seller‘s
warehouse to main carrier (including container
stuffing costs)
Y + * * * * * * * * *
3. Cost of insurance to border of exporting
country Y + * * * * * * * * *
4. Contract of carriage, trade documents in
exporting country Y + * + * * * * * * *
5. Cost of loading on main carrier (including
transport and warehouse port costs)
Ya + + + * * * * * * *
6. Cost of customs clearance at exportation,
including any export duties and other charges Y + * + * * * * * * *
Main carriage
7. Cost of international carriage to border of
importing country
− − − − − −
8. Insurance while in international carriage − − -
Costs in importing country
9. Cost of customs clearance at importation,
including import duties and other charges
-
10. Cost of unloading at the port of importation
(including transport and warehouse port costs) − −
b − − −
11. Cost of transportation in the importing
country (including container un-stuffing costs)
−
12. Cost of insurance while in transport in the
importing country
−
13. Cost of unloading at the buyer‘s warehouse − Abbreviations: CIF: cost, insurance, fright; EXW: ex works; FCA: free carrier; FAS: free alongside ship; FOB: free on
board; CFR: cost and freight; CPT: carriage paid to; CIP: carriage and insurance paid to; DAT: delivered at terminal;
DAP: Delivered at place; and DDP: delivered duty paid.
Note: ―Y‖ signifies that a cost item is covered by the definition of FOB-type value and normally included in the invoice
price when delivered under FOB terms. An asterisk (*) signifies that the cost item is normally included in the invoice
price, when the goods are delivered under the terms indicated by the columns heading, with no adjustment needed. A plus
sign (+) signifies that the cost item is excluded from the invoice price and is to be added. A minus sign (−) signifies that
the cost item is included in the invoice price and is to be subtracted. a Under the FOB term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value of the goods. However, it should be fully included in the FOB-type statistical value of exported goods. b Under the CIF term, this cost item may be divided between seller and buyer and may be only partially included in the
invoice value. However, it should be fully excluded from the FOB-type statistical value of exported goods.
185
E. Valuation of selected categories of imported and exported goods
14.29. Provided below is additional guidance on the valuation of selected categories of goods,
designed to assist countries in setting up the appropriate valuation procedures and to ensure
better international comparability. The present section relates to paragraph 5.14 of IMTS 2010,
which provides information regarding some additional categories of goods and to paragraph
4.16, on the valuation of transactions without valuation.
14.30. Media, whether or not recorded. According to IMTS 2010 (paras. 1.18 and 4.15 (b)),
media, whether or not recorded, should be valued at their full transaction value (and not at the
value of unrecorded media such as empty diskettes, blank CD-ROMs, DVDs, paper, etc.).
Compilers should be aware that the transaction value might fully or partially include the value of
certain services. In this connection, media carrying customized software or software written for a
specific client or originals of any nature, if identified, are to be excluded. Details on how the
transaction value is established and how the value of the software is identified and excluded
should be provided in the metadata. If a significant value of customized software or software
written for a specific client or originals is suspected to have been included, it is good practice to
contact the declarant and ask about the details of the product content. It should be noted that the
licence agreements on the usage of software (e.g., on subsequent purchase of additional usage
rights) that are not directly connected with a transfer of relevant media are not relevant for the
valuation of media.
Box XIV.2
Experience of Eurostat in distinguishing customized and regular software
Licences to use non-customized software downloaded or otherwise electronically delivered,
whether with a periodic licence fee or a single payment, should be included in computer services
(see Manual on Statistics of International Trade in Services 2010 a (MSITS2010), para. 3.225, as
well as para. 3.257 on mass-produced audiovisual products). In contrast, non-customized
software products on storage devices, and with licences that convey perpetual use, are to be
included in general merchandise trade statistics.
In case of cross-border acquisition of tailor-made software, the transactions should of course be
included in services. In the case where the software will be used for more than one year, the
company records it in the balance sheets as an asset (and not under profit and loss). The full
amount of the cross-border payment as an import will be recorded at the moment when the
software changes ownership. a
United Nations publication, Sales No. E.10.XVII.14.
Box XIV.3
Experience of Italy in distinguishing customized and regular software
The correct classification and measurement of trade in goods are highly problematic when the
momentary value of a good incorporates a significant share of remuneration for services
provided together with the good. Besides the well-known case of software products, there are
some other remarkable examples where the possibility of making a clear-cut distinction between
goods and services becomes more and more remote, as when machine tools incorporate services
for their installation as well as technical assistance on demand.
186
A concrete example of a goods transaction containing a relevant services component is provided
by Italy. A company in that country imported ground flying trainers consisting of a simulator and
its related software. The software was declared together with the simulator to constitute a single
good with a remarkably high unit value, which, usually, would indicate a possible outlier. The
correct classification and measurement of this trade transaction were possible on the basis of the
following additional information:
The commercial invoice sent by the company, upon a request for clarification, which
contained a detailed description of the two products (simulators and software) and their
specific value
Confirmation by the company that the software was not standardized but rather customized
for the specific use of the simulator
As a result, the transaction was recorded as two distinct flows: "Ground flying trainers and parts
thereof, n.e.s.a (excluding air combat simulators and parts thereof)" (HS 2007 code 880529); and
the software developed to use those simulators (HS 2007 code 852340). The commercial invoice,
the transport documents and the direct contact with the respondent were highly useful in enabling
a decision to be made on this kind of transaction and the correct statistical value of the good to
be measured. a Not elsewhere specified.
14.31. Electricity, gas, oil and water. According to IMTS 2010 (paras. 1.24 and 4.15 (c)),
electricity, gas, oil and water should be valued net of any delivery charges not included
according to FOB- or CIF type valuation. IMTS 2010 recommends that, in the absence of
adequate customs records: (a) the transaction value of these goods should be obtained directly
from the buyer and seller, (b) if only the overall value inclusive delivery charges is available,
such charges should be identified (e.g., using other sources of information and estimation) and
subtracted to obtain the statistical value of these goods, (c) delivery charges should be valued at
market prices, if possible, and (d) trading partners in such transactions should value and record
these flows in a uniform way to improve international comparability. The estimations of the
value can be based on historical data, information from traders, stock markets, spot prices or
small surveys of price statistics (see also chap. XXII for more details regarding the recording of
trade transactions in electricity, gas, oil and water).
14.32. Goods for processing with or without change of ownership. According to IMTS 2010
(paras. 1.19-1.21 and 4.15 (e)), if the transaction value of goods for processing entering or
leaving the compiling country without change of ownership is not available, the trade compilers
should apply the appropriate methods contained in the WTO Agreement on Customs Valuation
in order to derive their statistical value. Goods for processing should always be valued at their
full (gross) value. The full value of the goods in their unprocessed state must be reported for
transactions involving goods sent for processing. They may be based on a qualified estimation in
cases where the invoice does not show this amount. Regarding transactions following processing,
the full transaction value of the processed goods must be reported. The transaction value should
include the value initially reported for the unprocessed goods plus the processing costs.
14.33. Goods that cross borders as a result of transactions between related parties. The proper
statistical valuation of goods that cross borders as a result of transactions between related parties
(see IMTS 2010, para. 1. 22) is a challenge, as the use of transfer pricing in intra-firm trade is a
187
quite widespread practice especially in cases where there is no legal obligation for traders to
comply with the provisions of the WTO Agreement on Customs Valuation. In these cases, the
invoice may not reflect the true market value. The existence of a problem may be indicated by
the low unit values as compared with the unit values for identical or similar goods in transactions
between non-related parties. In cases of economic significance, it is good practice to replace the
transfer prices of such goods by their estimated statistical value following the methods provided
in the WTO Agreement, i.e., based on the value that would have been realized in the event of a
purchase or sale under normal market conditions. This type of estimation should also be
adequately reflected in the metadata (see chap. XXI for more details on the trade between related
parties).
14.34. Returned goods. According to IMTS 2010 (paras. 1.23 and 4.15 (f)), if identifiable,
returned goods are to be valued as at the initial transaction. When the returned goods are broken
or defective, the value reported should be the value of the original sale or purchase of the goods.
Returned goods are a special case of re-imports and re-exports and only in this special case does
the valuation at the initial transaction value apply. In all other cases, reimports and re-exports
should be valued as any other good, based on their transaction value.
14.35. Transactions without valuation: the case of humanitarian aid in goods. According to
IMTS 2010 (paras. 1.14 and 4.16), important transactions relating to humanitarian aid in high-
value goods (e.g., medicines) should be recorded in international merchandise trade statistics in
full commodity and partner detail. However, if recording full commodity and partner detail for
humanitarian aid transactions represents a disproportionate effort, the inclusion in the total of
exports or imports without such detail is deemed appropriate. In the United States of America,
for example, exports of international aid in goods are usually classified under four commodity
codes in Chapter 98. They are food products, medicinal and pharmaceutical products, wearing
apparel, and donated articles not elsewhere specified. It is required that the value of these goods
be reported at their market value. If that value is not known, then filers are to report an estimate
of how much they would receive if they sold the goods. They are advised that the value should
be consistent with respect to the goods being exported.
14.36. Waste and scrap. The transaction value of waste and scrap should be assessed as the full
payment by the importing country to the country of exportation, less payment by the exporting
country to the country of importation, for the services related to the disposal of waste and scrap,
if any. If the net payment of the importing country is zero or negative, that waste and scrap
should be excluded from the merchandise trade statistics of both countries, but separately
recorded, using appropriate quantity units.
F. Issues of currency recording and conversion
14.37. Summary of IMTS 2010 recommendations on currency conversion. IMTS 2010
recommends that:
(a) If the value of trade transactions is expressed initially in a variety of currencies or in other
standards of value compilers should convert these values into a single (reference) unit of account
(IMTS 2010, para. 4.18)
188
(b) The national currency unit is the preferable reference unit of account, however, if it is
subject to significantly larger fluctuations than those of other currencies, it might be appropriate
to use another, more stable unit of account (IMTS 2010, para. 4.18)
(c) Countries should follow the provisions of the WTO Agreement on Customs Valuation
with respect to exchange rate for conversion. The rate of exchange to be used shall be that duly
published by the competent authorities, the conversion rate to be used shall be that in effect at the
time of exportation or the time of importation, etc. (see IMTS 2010 para. 4.19);
(d) Compilers should apply an equivalent approach to conversion for both imports and
exports. In cases when both buying and selling (official/market) rates are available, the rate to be
used is the midpoint between the two, so that any service charge (i.e., the spread between the
midpoint and those rates) is excluded. If a rate is not available for the date of exportation or
importation, the average rate for the shortest period applicable should be used (see IMTS 2010,
para 4.20);
(e) If multiple official exchange rates are used, the trade transactions should be recorded
using the actual rate applicable to specific transactions, noting which official rate was used for
each currency (see IMTS 2010, para. 4.21);
(f) Transactions that involve parallel or black market rates should be handled separately
from those that involve official rates. Compilers of trade statistics should attempt to estimate the
exchange rate actually used in transactions in such markets, and should use that rate for
conversion (see IMTS 2010 para. 4.22).
14.38. Rules for conversion of the currency in which the value of a transaction is expressed to
the national currency are established in most countries by customs. In general, the conversion is
effected by customs or the declarants according to the rules set by customs. Compilers are
advised to review those rules and their application to assess their compliance with the
recommendations contained in IMTS 2010 and as described above. Compilers should cooperate
with customs to ensure compliance. If values are not converted by customs or declarants
according to the requirements, compilers should conduct the currency conversion themselves or
adjust values to ensure compliance.
14.39. Currency conversion: experience of Germany. Currency conversion is usually conducted
by customs or by the declarants and can refer to (a) official rates that are applicable for customs
purposes (published monthly by the customs administration), (b) the exchange rates that are
applicable for taxation purposes (published monthly by the Ministry of Finance) or (c) official
exchange rates published in the daily press at the time when the declaration is completed. Data
collection and data processing are carried out in the national currency (the euro). However, for
international comparisons the results are published in euros as well as in dollars. The conversion
from euro to dollar is conducted by the Statistical Office and the conversion factors are based on
the average currency exchange rates calculated monthly and published by the European Central
Bank (euro reference rates). This method is also applied to the currency conversion for yearly
figures (i.e., annual average exchange rates are not used). Currency conversion may be one cause
for asymmetries in mirror statistics.
14.40. Currency conversion: experience of Brazil. The foreign trade operations in Brazil are
controlled by a system called SISCOMEX, which is characterized by the integration of the
189
activities of recording, monitoring and control of foreign trade operations through a single flow
of information. The integration of this system allows the values of all transactions to be
automatically converted to the equivalent value in United States dollars, using the official
exchange rate of the Central Bank on the day of the registration of the export or import
operations.
Box XIV.4
Experience of the European Union in currency conversion using different exchange rates
for customs data and in Intrastat
Currency conversion shall be made if the invoiced value is not stated in the national currency of
the compiling member State.
The exchange rate to be applied in the Intrastat system shall be:
The rate of exchange applicable for determining the taxable amount for value added tax
(VAT) purposes, when this is established or
The official rate of exchange at the time the declaration has been completed or that
applicable to calculation of the value for customs purposes, in the absence of any special
provisions decided by the member States
The exchange rate applicable for VAT purposes shall be the latest selling rate recorded, at the
time the VAT becomes chargeable, on the most representative exchange market or markets of
the member State concerned. In practice, this means that the exchange rate announced by the
European Central Bank (for members of the euro zone), or by the national bank for the date
when the invoice was issued, is applied.
The statistical value on the customs declaration shall be expressed in the national currency of the
member State where the customs declaration is lodged. Where a conversion of currency is
necessary for expressing the statistical value in the national currency, the rate of exchange to be
used shall be:
The rate applicable according to the provisions on currency conversion laid down in the
Customs Code at the time the customs declaration is accepted or, failing this,
The reference rate applicable at the time the goods are imported or exported set by the
European Central Bank for member States belonging to the euro zone or the official rate set
by member States not belonging to the euro zone
The rate recorded on the second-last Wednesday of a month and published on that or the
following day is used, generally to convert factors used to determine the customs value of goods
expressed in a currency other than that of the member State where the valuation is made. This
exchange rate shall be used during the following calendar month unless it differs by 5 per cent
from that recorded on the last Wednesday of a month.
191
Chapter XV
Quantity measurement
15.1. The present chapter focuses on good practices in the collection, validation and reporting
of quantity information based on the recommendations contained in chapter V, on quantity
measurement, of IMTS 2010. It provides details on the World Customs Organization (WCO)
standard units of quantity and elaborates the concept of net weight. The chapter covers the
subject of data compilation from customs and non customs sources, the conversion of non-
standard quantity units to the WCO standard units and net weight, quality issues and the
estimation and imputation of missing quantities. The annexes to the chapter present
mathematical conversion factors and conversion factors applied by UNSD. This chapter is linked
to chapter XIII on the Harmonized Commodity Description and Coding System (HS), as the
standard units of quantity are specified in terms and as part of the HS. Section D on quality
issues, which is linked to Chapter IX, contains additional information regarding the quality
assurance of quantity and net weight.
A. An overview of the World Customs Organization standard units of quantity
15.2. IMTS 2010 recommendations regarding units of quantity. IMTS 2010 (para. 5.5)
recommends that countries collect or estimate, validate and report quantity information in the
WCO standard units of quantity and in net weight151
on all trade transactions.152
Specifically, it is
recommended that:
(a) Countries use the applicable WCO standard units of quantity when collecting and
reporting international merchandise trade on the basis of the Harmonized System;153
(b) In the case of the HS headings (subheadings) where the standard unit is other than
weight, a net weight also be compiled and reported;
(c) Weight figures be reported on a net weight basis; however, if only gross weight is
available, it should be recorded and used for estimation of net weight;
(d) Countries that use units of quantity other than the WCO standard units or use units of
quantity different from the one recommended for the specific commodity (HS six-digit
subheading) provide the conversion factors to the recommended standard units in their metadata.
15.3. WCO standard units of quantity. In 2011, WCO adopted a new Recommendation on the
use of standard units of quantity to facilitate the collection, comparison and analysis of
151
Information on net weight is useful for economic analysis, such as the calculation of unit values. To the extent
that gross weights (including packaging) are also desired by a country, they should be collected directly. However,
given that collection of gross weight data presents difficulties in many countries, countries may wish to obtain gross
weights from net weights through sampling and estimation.
152 A few exceptions may be noted: e.g., net weight does not apply to HS subheading 271600 ―Electrical energy‖.
153 It is acknowledged that WCO standard units of quantity do not necessarily reflect industry norms for trade under
certain subheadings in all countries.
192
international statistics based on the HS Nomenclature 2012 Edition.154
The WCO standard units
of quantity are:155
Weight: - kilograms (kg)
- carat (carat)
Length: - metres (m)
Area: - square metres (m2)
Volume: - cubic metres (m3)
- litres (l)
Electrical power: - 1,000 kilowatt-hours (1,000 kWh)
Number (units): - pieces/items (u)
- pairs (2u)
- dozens (12u)
- thousands of pieces/items (1,000u)
- packs (u (jeu/pack))
15.4. WCO Recommendation. In the WCO Recommendation on the use of standard units of
quantity, one of the above standard units of quantity is specified for each HS six-digit
subheading.156
Further, it is recommended that Member administrations and Contracting Parties
to the Harmonized System Convention report international trade data to the United Nations and
other international organizations, in terms of standard units of quantity specified in the annex to
the WCO Recommendation, employing as many as possible, but not less than 90 per cent of the
HS subheadings.157
It is recognized that in the commercial practice of many countries the
quantities of some goods might be recorded in other units of quantity, as the application of the
WCO recommended quantity units is not an international legal obligation. If such non-standard
units are in use, it is a good practice to provide users with the appropriate factors of conversion
to net weight and, if required by users, to the appropriate WCO standard units of quantity.
15.5. Recommended quantity units by subheading, heading and HS Chapter level. For 75.8 per
cent of the six-digit subheadings of HS 2012, the recommended unit is kilograms and for almost
21.3 per cent it is number of items (see table XV.1). Other recommended units are mainly used
for very specific commodities. For example, ―square metres‖ is the recommended quantity unit
for, among other commodities, carpets and other textile floor coverings (HS 2012 heading
57.02); ―1,000 kilowatt hours‖ only applies to electrical energy (HS 2012 code 2716.00);
―metres‖ is the recommended quantity for only two headings, namely, photographic film in rolls
(HS2012 heading 37.02) and cinematographic film (HS2012 heading 37.06); ―pairs‖ is mainly
154
See World Customs Organization, Recommendation of the Customs Co-operation Council on the use of the
standard units of quantity to facilitate the collection, comparison and analysis of international statistics based on the
Harmonized System, (24 June 2011).
Available from http://www.wcoomd.org/en/about-us/legal-instruments/recommendations/~/media/WCO/Public/
Global/PDF/About%20us/Legal%20Instruments/Recommendations/HS/Recommendation_HS2012_UnitsOfQuantit
y.ashx.
155 Ibid, annex, introduction, para. 4.
156 Ibid., annex, para. 2. The Recommendation takes into account the amendments contained in HS2012 and revokes
the previous Recommendation on the use of standard units of quantity.
157 WCO Recommendation on the use of the standard units, tenth preambular para.
193
used for footwear (HS2012 headings 64.01 to 64.05) and skis and ice skates and roller skates etc.
(HS2012 heading 9506); and ―litres‖ is the recommended quantity unit only for beverages, spirits
and vinegar etc. (HS2012 Chapter 22). For two thirds (63 out of 96) of the HS chapters, the
recommended quantity is the same for the entire chapter, and for 90 percent out of 1224 headings
the recommended quantity is the same for all commodities within the heading. This indicates that
the recommended quantity is the same for many commodity groupings.
Table XV.1
Quantity units of the HS 2012 six-digit subheadings
WCO quantity unit a WCO
abbreviation
Number of
sub-headings
per quantity
unit
Share of
quantity units
(percentage)
No quantity - 1 0.00
Area in square metres m² 50 1.00
Electrical energy in thousands of
kilowatt-hours 1000 kWh 1 0.00
Length in metres m 10 0.20
Number of items u 1 106 21.30
Number of pairs 2u 24 0.50
Volume in litres l 22 0.40
Weight in kilograms kg 3 949 75.80
Thousands of items 1,000u 1 0.00
Number of packages u(jeu/pack) 1 0.00
Volume in cubic metres m³ 32 0.60
Weight in carats carat 8 0.20
Total 5205 a In para. 4 of the introduction to the WCO Recommendation, the standard unit ―dozens (12u)‖ is listed. However,
this standard unit has never been attributed to any of the six-digit subheadings of the HS Nomenclature.
15.6. Practices in the application of the supplementary units in the European Union.
Supplementary units used in the European Union to measure quantity other than net mass are
laid down in the Combined Nomenclature (CN)158
(see box XV.1). They are defined at the most
detailed level, i.e., for the CN subheadings. If a supplementary unit is not given in the CN, the
quantity of goods is expressed only in net mass. EU supplementary units may differ from those
recommended by WCO (for example, volume for HS 271121 (Natural gas) is expressed in
terajoules (gross calorific value)). The EU supplementary units are subject of annual revision of
the Combined Nomenclature.
158
The Combined Nomenclature (CN) is the classification used within the European Union for collecting and
processing foreign trade data. The CN is defined on the eight-digit level, adding subdivisions to the HS. For further
details on the CN, see box XIII.9.
194
Box XV.1
Supplementary units of the Combined Nomenclature (CN) used in EU member States
c/k Carats (1 metric carat = 2 × 10–4
kg)
ce/el Number of cells
ct/l Carrying capacity in tonnes
g Gram
gi F/S Gram of fissile isotopes
kg C5H14ClNO Kilogram of choline chloride
kg H2O2 Kilogram of hydrogen peroxide
kg K2O Kilogram of potassium oxide
kg KOH Kilogram of potassium hydroxide (caustic potash)
kg met.am. Kilogram of methylamines
kg N Kilogram of nitrogen
kg NaOH Kilogram of sodium hydroxide (caustic soda)
kg/net eda Kilogram drained net weight
kg P2O5 Kilogram of diphosphorus pentaoxide
kg 90 % sdt Kilogram of substance 90 % dry
kg U Kilogram of uranium
1 000 kWh Thousand kilowatt-hours
l Litre
1 000 l Thousand litres
l alc. 100 % Litre pure (100 %) alcohol
m Metre
m2 Square metre
m3 Cubic metre
1 000 m3 Thousand cubic metres
pa Number of pairs
p/st Number of items
100 p/st Hundred items
1 000 p/st Thousand items
TJ Terajoule (gross calorific value)
15.7. Definition of gross and net weight. Weight (in kilograms) can be measured on a net or a
gross basis to meet a variety of needs. The total gross weight is defined by WCO as the weight
(mass) of goods including packaging but excluding the carrier's equipment for a declaration,
while net weight refers to the weight (mass) of the goods themselves without any packing. 159
Both measures of weight have their own analytical value. For example, gross weight is more
appropriate for analysis of transportation, while net weight is necessary, e.g., for the analysis of
the nutritional or calorie content of imported food items.
15.8. Specific guidelines regarding the definition of net weight. IMTS 2010 (para. 5.5 (c))
recommends that weight figures be reported on a net basis, i.e., excluding all/any packaging.
This also applies when the packaging is very elaborate or expensive, although one could imagine
159
See WCO data set for V2.0 of the WCO Customs Data Model. Available from http://www.customs.gov.au/
webdata/resources/files/dataset.pdf.
195
cases where the packaging itself is also a good, for example, a silver caddy containing tea, or an
ornamental ceramic bowl containing sweets, or where packing materials or packing containers
are clearly suitable for repetitive use, for example, certain metal drums or containers of iron or
steel for compressed or liquefied gas.
Box XV.2
Definition of “net weight” adopted by China
Because the information on net weight often refers to the transportation document, in practice,
the net weight is often the weight excluding the weight of the outer package. According to the
Guideline for Completing the Customs Import and Export Declaration Form, the definition of net
weight for some specific goods are listed as following:
(a) For the goods contained in a reusable container, such as compressed oxygen or similar
products, the net weight should exclude the weight of the container;
(b) For the goods contained in a package for retail sale, such as canned food, cosmetics,
medicine and other similar products, the net weight of the goods should exclude the outer
package, but include the inner package for retail packing;
(c) For goods like beverages, spirits or similar products, the net weight of goods is the weight of
the liquid, which should exclude the packaging, even if for retail packing.
Box XV.3
Definition of “net weight” (mass) used in the European Union
In the European Union, completion of information on net mass is, in general, obligatory for all
customs procedures. The net mass is the mass of the goods without any packaging.
―Packaging‖ means materials and components used in any packaging operation to wrap, contain
and protect articles or substances during transport. The term ―package‖ includes all articles used
and, in particular, holders used as external or internal coverings for goods, holders on which
goods are rolled, wound or attached, containers (other than those defined in international
conventions) and receptacles. The term excludes means of transport and articles of transport
equipment such as pallets and freight containers.
Example: A company imports 1,000 bottles of wine. Each bottle of wine weighs 1.25 kg and the
wine in each bottle weighs 0.75 kg. The figure 750 must be entered in box 38 (not the unit
value).
B. Compilation of quantity data from customs sources and non-customs sources
15.9. Compilation of quantity data using customs records. Customs declarations contain in
general (see chap. II) fields for the supplementary quantity and net weight. However, the
provision of this information might not always be mandatory and/or it might not be provided by
the declarant. Quality issues and the estimation of quantity information are covered in sections D
and E below.
The boxes XV.4 to XV.6 below provide country experiences in the use of non-customs data
sources for the compilation of quantity data.
196
Box XV.4
Compilation of quantity information in the Intrastat system of the European Union
In the Intrastat system, the collection of data on net mass is not always required. Member States
may opt not to request the net mass for all CN codes. In such cases, either member States define
a list of codes exempted from reporting the net mass or the net mass is not collected for the CN
codes with a specified supplementary unit.
However, if the information is not collected, member States shall estimate the net mass at the
CN8 subheading level. In order to facilitate the task of the member States, Eurostat has
established European average conversion factors for all the CN codes with a supplementary unit.
These conversion factors were established on the basis of EU historical trade data after the
filtering of outliers. Member States are free to use either the list of conversion factors provided
by Eurostat or any other estimation method.
In member States that apply a simplification threshold, the providers of statistical information
(PSI) may be exempted from providing information on quantity (net mass or a supplementary
unit) if they belong to the group that benefits from the simplified reporting obligation.
PSIs which report the transactions below €200 do not have to report quantity (net mass or a
supplementary unit).
It should be noted that the provisions for compilation of quantity for some specific goods and
movements differ from those that fall under the standard rules for compiling statistics on
European Union trade in goods; that is to say, the quantity is optional for industrial plants, goods
delivered to vessels and aircraft (except for net mass of goods belonging to CN chap. 27) and
goods delivered to and from offshore installations (except for goods belonging to CN chap. 27).
As far as vessels and aircraft are concerned, the quantity is expressed in net mass and pieces. The
provisions for specific goods and movements mentioned here are identical for compilation of
intra- and extra-EU statistics.
Box XV. 5
Norway: direct reporting of quantity of exports of petroleum products
Significant parts of Norway‘s petroleum exports are produced outside Norway‘s customs
territory and hence are not included in data received from customs. As an alternative, reports of
figures for Norway‘s exports of crude oil are received both from Government institutions and
directly from the oilfield operators.
Crude oil. Preliminary figures for Norway‘s exports of crude oil are received directly from the
oilfield operators. There are different reports depending on whether the mode of transportation is
oil tanker or pipeline. Monthly field reports of transportation by oil tankers contain lifting date,
cargo number, name of vessel, name of shipper, destination, net barrels (bbls) and net metric
tons. The report of transportation by pipeline contains volume in barrels per terminal.
Destination countries for transportation by pipeline are based on reports from Norway‘s
authorities. On a quarterly basis, final shipment figures, volume and price per barrels (FOB) are
received from the owners of the oil cargos. Occasionally, figures for crude oil transported by
pipeline are also received; information is received on a quarterly basis.
197
Natural gas. Preliminary volume figures for Norway‘s exports of natural gas are received
monthly from the oilfield operators. There are two means of transportation: a significant
proportion of the pipeline exports goes through the pipeline transportation system, but to some
extent there is also transportation by gas tankers (LNG). Monthly reports of transportation by
pipeline contain volume in standard cubic metres (scm). Information on destination countries for
transportation by pipeline is based on reports from Norway‘s authorities. Field reports of
transportation by tankers contains lifting date, cargo number, name of vessel, name of shipper,
discharge port and net metric tons. Preliminary prices are based on information from petroleum
companies. Final figures, volume and value, are received from the largest producing companies
on a quarterly basis.
Box XV.6
Uganda: quantity units used in the Informal Cross Border Trade survey
In Uganda, prior to conduct of an Informal Cross Border Trade (ICBT) survey, various units of
measurement based on the WCO standard units of quantity were developed for commonly
transacted commodities, with the aim of guiding data collection. The weight of commodities was
derived by physically weighing them (especially agricultural products) or by using already
established packaging weights of informal survey practitioners. Nevertheless, there were
challenges encountered in respect of obtaining weights of assorted commodities in the same
package and converting certain weights to internationally recommended weights for a particular
product.
C. Factors with which to convert from non-standard to standard units of quantity
15.10. Converting units of quantity. There are two means of converting reported units of
quantity to standard HS units of quantity, namely, (a) mathematical conversion of the reported
units to the standard units and (b) conversion from one unit to another unit using, for example,
the specific gravity of the commodity or commodities involved.
15.11. Mathematical conversion. Annex XV.A below gives examples of (multiplication) factors
with which specific non-standard units can be converted to standard HS units of quantity. The
table contains mostly units of quantity of the systems of measurement of the United States of
America and the United Kingdom of Great Britain and Northern Ireland. Those factors are
applied by the United Nations Statistics Division to convert units of quantity to WCO standard
unit of quantity for certain HS headings. It is good practice to establish a comprehensive list of
conversion factors and to publish and circulate this list among all agencies involved in the
collection of trade statistics. There are other country-specific units of measurement, many of
which apply to a single commodity. Commodity boards and other organizations publish
conversion factors for some of those.160
Many of those commodity-specific sources are gathered
together in other reference sources.161
Still other references deal with smaller groups of
160
See, for example, Quarterly Bulletin of Cocoa Statistics.
161 See, for example, The Economist Desk Companion: How to Measure, Convert, Calculate and Define Practically
Anything (New York, John Wiley and Sons, 1998).
198
commodities.162
15.12. Specific gravity. The use of specific gravity to convert, for instance, litres of a certain
commodity into kilograms constitutes a much more complicated and less accurate approach,
since it is based on empirical rather than mathematical principles. HS headings often contain a
multitude of products which can all differ in, say, weight per volume or weight per unit. Even
such seemingly homogeneous commodities as crude oil and milk will have different weight-per-
volume indices, depending on country of origin and, for example, on the sweetness (for crude
oil) or the concentration of fat or time of collection (for milk) (for examples of the various
conversion factors, see annex XV.B below).
15.13. Use of specific versus broad-based conversion factors. The best conversion of volume
into weight or of pieces into weight is carried out at the national or even the subnational level.
For instance, to convert to cubic metres (m3) the volume of sawnwood originally reported by
Canada and the United States in 1,000 board feet, the Food and Agriculture Organization of the
United Nations applies the country-specific conversion factor of 2.36 m3 per 1,000 board feet, as
sawing conventions in those countries generally result in a volume that is smaller than the
nominal volume. 163
In contrast, broad-based conversions at the national or international level are
inaccurate by definition and can serve the purpose only of making quantity (especially weight)
estimates for general trade or transport analyses. The use of broad-based conversion factors by
FAO is reflected in the examples below:
(a) When countries record coconuts in number instead of weight, amounts are converted to
weight on the assumption that, on an average basis, 1,000 nuts = 1 metric ton, unless official
conversion factors are available;
(b) Refined sugar is converted to raw sugar equivalent using the factor 1.087 for all
countries;
(c) Quantities of wine, vermouth and similar beverages are expressed in weight; for countries
recording their statistics in volume, it is assumed that 1,000 liters = 1 metric ton.
D. Quality issues
15.14. The need for quantity information. Quantity is an important dimension of international
trade statistics which is indispensable for various policy and analytical purposes, including for
the planning of transport infrastructure, the compilation of energy, agricultural and other
commodity balances, the assessment of the impact of international trade on the environment, and
the verification of trade values and the construction of trade index numbers.
162
See, for example, ―Weights, measures, and conversion factors for agricultural commodities and their products‖,
Agricultural Handbook No. 697 (Washington, D.C., United States Department of Agriculture, June 1992).
163 It is estimated that for the United States, taking coniferous and non-coniferous data together, the actual average
volume of rough green sawnwood would be 3 per cent less than the nominal volume, while the weighted average for
surfaced dry coniferous and rough dry non-coniferous sawnwood would be 27 per cent less than the nominal
volume‖. Further details are available from the FAO website (www.fao.org).
199
15.15. Challenges in the compilation of quantity data. Often quantity, whether supplementary
quantity or net weight, is not provided by the traders completing the customs declarations. In
other cases, the quantity provided is not correct or the supplementary quantity is provided in a
quantity unit different from the one recommended for the particular commodity. For instance,
when a shipment contains several different commodities, the quantity might be given as the gross
weight of the shipment. Further, in commercial practice, barrels are often used instead of weight
and appropriate conversion factors may not be available. Also, the customs administration is
generally more interested in the quantity information for imports than in that for exports, since
quantity information is, in some cases, utilized to determine both import duties and the unit
values used to validate the price and value information declared by the importers.
Box XV.7
The approach of the United States of America to validation of quantity data
In the United States of America, all eligible export shipments are required to be reported
electronically through the Automated Export System (AES). The AES ensures the quality of
quantity data by validating the reported shipment information and returning electronic responses
to filers. For example, the AES requires that the unit of measure for each quantity reported
match the unit of measure required for the Harmonized Tariff code reported. If there is no
match, the filer receives a message indicating that a fatal condition is noted owing to invalid data
and that their shipment has not been accepted. Filers must immediately address the problem,
correct the data and retransmit the information to the AES. Failure to comply may result in a
penalty to the filer. Outreach and education programmes are conducted to assist filers with their
reporting, including an AES fatal error outreach program.
15.16. Best practices in improving the compilation of quantity data. It is recommended that the
training courses for traders on filling out customs declarations devote sufficient attention to the
correct declaration of quantity information on the customs forms.
15.17. Quantity aggregations. The compilation of quantity aggregates has both an analytical and
a quality dimension, owing to the heterogeneity of the goods that constitute broader commodity
groups. As the proper use of quantity aggregates is limited to very specific types of analysis (e.g.,
of transportation issues), it is good practice to provide users with clear information on the
heterogeneity underlying each quantity aggregate, and to encourage, for instance, the use of
foreign trade indices as alternative measures of aggregate volume and price trends.
E. Estimation and imputation of quantity data
15.18. In the absence of collected quantity information, it is good practice to estimate and
impute quantity data and reflect the estimation and imputation methods in the metadata.
15.19. Estimation of quantity data: current practice in Germany. Missing or erroneous quantity
data are generally estimated. Quantity data are regarded as erroneous and are replaced by an
estimated value if the ratio between statistical value and quantity is outside a valid range defined
separately for each commodity code. In the case where an error is detected, as a general rule, it is
assumed that the declared quantity (not the declared value, which is assumed to be more reliable)
has led to the mistake. The acceptable range is being reviewed at least once a year and updated if
200
necessary. The estimation is based on the average values per quantity unit. These values are
calculated for each commodity code empirically with the help of plausible data relating to the
preceding 12 months. The average values are updated permanently. For some commodities, a
supplementary unit in addition to the net mass (e.g., the metre or the litre) is used for measuring
quantity. If available, the supplementary quantity unit (instead of the unit value) is used to
estimate the net mass on the basis of specific conversion factors. It must be kept in mind that the
estimation of quantities may be difficult if the composition of a commodity group is
heterogeneous and the unit values show a broad distribution. Hence, estimations carried out
automatically should be checked manually, at least in cases of high values.
15.20. Unit value editing and quantity imputation: the experience of Canada. Prior to the advent
of the current editing system, Statistics Canada employed a parameter-based approach in which
calculated unit values were compared with expected high and low unit values. However, this
approach had several limitations: (a) given the number of classification codes, it became
increasingly difficult to maintain an up-to-date set of parameters for each code; (b) although the
Harmonized System provides a very detailed product classification, numerous codes include
goods that are not homogeneous, resulting in extremely wide parameter sets. Consequently, a
new methodology, referred to as ―clipping‖, was developed. Essentially, this approach is based
on the assumption that the majority of transactions are reported correctly and that only the
outliers require correction or imputation. For each classification code, the clipping system
calculates parameter sets based on the current data received. Outliers are then moved towards the
mean through imputation of a corrected quantity. The principle advantages of this system are: (a)
the dynamic parameters are based on more current prices; (b) the effects of seasonality are at
least partially compensated for; and (c) it is far less resource-consuming.
15.21. Estimation methods used by UNSD for UN Comtrade. Estimation of quantity and net
weight is performed in either of two cases: where the data have not been provided or where the
data provided do not conform with, and cannot be mathematically converted to, the WCO
recommended quantity units. To take the best possible advantage of the information provided by
a country, the quantity estimation is applied in the following sequence: 1. Estimation using
empirical conversion factors; 2. Estimation using partially reported quantity and/or net weight
and 3. Estimation using standard unit values. However, broad-based conversions and estimation
of quantity at the national or international level are inaccurate by definition and can serve the
purpose only of making quantity (especially weight) estimates for general trade or transport
analyses. Estimates of quantities are sometimes also needed to preserve aggregated quantity
information at the heading level of the HS.
201
Annex XV.A.
Mathematical conversion factors
Reported
unit of quantity
WCO standard units of
quantity
Conversion factor from
the reported unit to the
WCO unit of quantity
Barrel (BBL) litre (l) 159.000
Board foot (BFT) cubic metre (m3) 0.00236
Cubic foot (CF) cubic metre (m3) 0.02832
Cubic yard (CYD) cubic metre (m3) 0.7646
Cord (CD) cubic metre (m3) 2.550
Centimetre (CM) metre (m) 0.010
Cubic centimetre (CC) litre (l) 0.001
Cubic metre (CBM) litre (l) 1000.000
Dozen (DOZ) thousand pieces/items (1,000u) 0.0120
Dozen (DOZ) piece/item (u) 12.000
Foot (FT) metre (m) 0.3048
Gallon (GAL) litre (l) 3.785
Gram (GM) kilogram (kg) 0.001
Gross (GR) piece/item (u) 144.000
Hundredweight (CWT) kilogram (kg) 45.360
Linear feet (LFT) metre (m) 0.3048
Long ton (LTN) kilogram (kg) 1016.000
Litre (LTR) cubic metre (m3) 0.001
Metric ton (TON) kilogram (kg) 1000.000
Number (NO) thousand pieces/items (1,000u) 0.001
Ounce (OZ) kilogram (kg) 0.02835
Pound (LB) carat (carat) 2268.000
Pound (LB) kilogram (kg) 0.4536
Pair (PR) dozen (12u) 0.1667
Square centimetre (SCM) square metre (m2) 10000.000
Square foot (SFT) square metre (m2) 0.0929
Square inch (SQT) square metre (m2) 0.0006452
Square yard (SYD) square metre (m2) 0.8361
Short ton (STN) kilogram (kg) 907.200
Thousand metres (THM) metre (m) 1000.000
Thousand (THS) pieces/item (u) 1000.000
Thousand board feet (MBF) cubic metre (m3) 2.360
Thousand square foot (MSF) square metre (m2) 92.900
Troy ounce (TOZ) kilogram (kg) 0.03110
Wine gallon (WG) litre (l) 3.785
Yard (YD) metre (m) 0.9144
202
Annex XV.B.
Quantity conversion factors used by the United Nations Statistics Division to convert
volume (V) and number/units (N) to weight (W), for selected categories of goods
HS code from to HS heading Conversion
factor
040110 V W Milk not concentrated, < 1% fat 1.03
040120 V W Milk not concentrated, 1-6% fat 1.01
040130 V W Milk and cream not concentrated 0.99
040291 V W Milk and cream unsweetened 0.99
040299 V W Milk and cream other sweetened 0.97
040310 V W Yogurt concentrated or not 0.97
040390 V W Buttermilk, curdled milk 1.02
040410 V W Whey whether or not concentrated 1
040490 V W Products consisting of whey 1
040700 N W Eggs, bird, in shell 0.000058
040811 N W Egg yolks dried 0.000244
040819 N W Egg yolks other 0.000073
040891 N W Eggs, bird, not in shell, dried 0.000244
040899 N W Eggs, bird, not in shell, other 0.000073
200911 V W Orange juice, frozen 1
200919 V W Orange juice, other 1
200920 V W Grapefruit juice 1
200930 V W Citrus fruit juice, other 1
200940 V W Pineapple juice 1
200950 V W Tomato juice 1
200960 V W Grape juice 1
200970 V W Apple juice 1
200980 V W Fruit and vegetable juice, other 1
200990 V W Mixtures of juices 1
210500 V W Ice cream 0.7
220110 V W Mineral and aerated waters 1
220190 V W Ice and snow and potable waters 1
220210 V W Waters, containing sugars 1
220290 V W Non-alcoholic beverages 1
220300 V W Beer made from malt 1
220410 V W Grape wines, sparkling 1
220421 V W Grape wines, other, in bottles 1
220429 V W Grape wines, other 1
220430 V W Grape must, other 1
220510 V W Vermouth, in bottles 1
220590 V W Vermouth, other 1
220600 V W Fermented beverages, other 1
220820 V W Spirits obtained by distillation 0.925
220830 V W Whiskies 0.925
220840 V W Rum and tafia 0.925
203
220850 V W Gin and genever (Geneva) 0.925
220860 V W Vodka 0.925
220870 V W Liqueurs and cordials 0.925
220890 V W Other spirits with alcohol <80% 0.925
240220 N W Cigarettes containing tobacco 0.000001
270600 V W Tar distilled from coal 1
270710 V W Benzole 0.88
270720 V W Toluole 0.88
270730 V W Xylole 0.88
270740 V W Naphthalene 0.735
270750 V W Aromatic hydrocarbon mix 0.735
270760 V W Phenols 0.735
270791 V W Creosote oils 0.735
270799 V W Oils, other, of coal tar 0.735
270810 V W Pitch 1.14
270820 V W Pitch coke 1.14
270900 V W Petroleum oils, crude 0.86
271000 V W Petroleum oils, other than crude 0.86
271210 V W Petroleum jelly 0.8
271220 V W Paraffin wax containing < 75% oil 0.8
271290 V W Mineral waxes, other 0.8
271311 V W Petroleum coke, not calcined 1.14
271312 V W Petroleum coke, calcined 1.14
271320 V W Petroleum bitumen 1.01
271390 V W Residues of petroleum oil 1.01
271500 V W Bituminous mixtures based on natural asphalt 1.04
340311 V W Lubricating oils for treatment of leather and
textiles
0.9
340319 V W Lubricating oils, other 0.9
340391 V W Lubricating grease for treatment of leather
and textiles
0.9
340399 V W Lubricating grease, other 0.9
440110 V W Fuel wood 0.725
440121 V W Wood in chips, coniferous 0.7
440122 V W Wood in chips, non-coniferous 0.7
440130 V W Sawdust and wood waste 0.7
440200 V W Wood charcoal 0.4
440310 V W Poles, treated or painted 0.7
440320 V W Logs, poles, coniferous 0.7
440341 V W Tropical wood logs, meranti 0.75
440349 V W Tropical wood logs, other 0.75
440391 V W Logs, oak 0.75
440392 V W Logs, beech 0.75
440399 V W Logs, non-coniferous, other 0.75
440610 V W Railway sleepers, not impregnated 0.78
204
440690 V W Railway sleepers, other 0.78
440710 V W Lumber, coniferous 0.6
440724 V W Tropical lumber, mahogany, etc. 0.7
440725 V W Tropical lumber, meranti, red 0.7
440726 V W Tropical lumber, meranti, white 0.7
440729 V W Tropical lumber, other 0.7
440791 V W Lumber, oak 0.7
440792 V W Lumber, beech 0.7
440799 V W Lumber, non-coniferous 0.7
440910 V W Lumber, coniferous, continuously shaped 0.6
440920 V W Lumber, non-coniferous, continuously
shaped
0.7
450110 V W Natural cork, raw 0.24
450190 V W Natural cork, other 0.24
450200 V W Natural cork, roughly squared 0.24
205
Chapter XVI
Partner country
16.1. Introduction. The present chapter elaborates on the recommendations on partner-country
attribution contained in IMTS 2010, chapter VI. In particular, it discusses details of the definition
of country of origin provided in the revised Kyoto Convention (RKC), elaborates the concepts of
country of the last known destination and country of consignment, and describes challenges and
good practices in partner country attribution for imported and exported goods. It also discusses
the definition of partner country in trade between member countries of a customs union, and the
partner country coding for statistical purposes. This chapter is related to chapter VI of the present
Manual, on statistical territory and organization of data collection.
A. Recommendations of IMTS 2010
16.2. Trade by partner country. As stated in IMTS 2010 (para. 6.1), trade statistics by partner
country, both for the total value of trade in goods and for the value and quantity of trade in
individual commodities, are of significant analytical value and are used for a number of
purposes, including the analysis of economic trends and regional trade patterns, the calculation
of trade shares, market analysis, business decisions, trade policy monitoring and negotiations, the
compilation of national accounts, and balance of payments, as well as for checking the accuracy
and reliability of trade data. Trade-by-partner statistics are frequently used by analysts to
estimate imports and exports of a country that does not report trade data (or does so only after
substantial delay).
16.3. IMTS 2010 recommendations. It is recommended that in the case of imports, the country
of origin be recorded, and in the case of exports, the country of last known destination be
recorded (IMTS, para 6.25). It is recognized that the partner data compiled on the basis of the
country of origin (for imports) and the country of last known destination (for exports) are very
often not comparable which limits their usefulness for economic analysis. To provide more
comparable data, it is recommended that the country of consignment be recorded for imports as
the second partner country attribution, alongside country of origin; in the case of exports, the
compilation of export statistics on the country-of-consignment basis is encouraged, depending on
a country‘s needs and circumstances, and may be considered by some countries as a rather
longer-term objective (ibid., para. 6.26). Also, its is recommended that the economic territory of
the trading partners constitute the basis upon which the statistics on trade by partner are
compiled (ibid., para. 6.28).
B. Country of origin and its use in import statistics
1. Rules of origin
16.4. Rules of origin. Statistics on imports by country of origin depend on the countries‘ rules
of origin and the ways they are applied. Compilers need to be familiar with those rules and to
know how they are applied in order to be able to assist users in interpreting the disseminated
trade data and to provide feedback to customs authorities on possible amendments and
206
improvements. Compilers need to be aware that, in the absence of internationally accepted
detailed rules of origin, the only international guidance in this area is provided in Specific Annex
K of the RKC. The RKC is instrumental in ensuring that national rules of origin have many
similarities. However, Annex K is very general and, in practice, national rules of origin for
particular commodity groups reflect national trade policy priorities. Therefore, they may, and do,
vary significantly.
16.5. Non-preferential and preferential rules of origin. In general, countries distinguish
between rules of origin for non-preferential and preferential trade. Non-preferential rules of
origin are used to differentiate between foreign and domestic products in order to determine the
origin of products that are subject to various kinds of commercial policy measures (such as the
application of the most-favoured-nation (MFN) clause, anti-dumping and countervailing duties,
safeguard measures, origin marking, quantitative restrictions, tariff quotas and public
procurement). The preferential rules of origin are related to contractual or autonomous trade
regimes leading to the granting of tariff preferences.
2. Guidance provided by the revised Kyoto Convention
16.6. Guidance on non-preferential rules of origin. The RKC is intended to provide guidance
on the non-preferential rules of origin in trade. ―Country of origin of goods‖, according to the
RKC, means the country in which the goods have been produced or manufactured, according to
the criteria laid down for the purposes of application of the Customs tariff, of quantitative
restrictions or of any other measure related to trade.164
16.7. Two basic criteria. The RKC formulates two basic criteria for the determination of the
origin of goods: (a) the criterion of goods "wholly produced" (obtained) in a given country,
where only one country enters into consideration in attributing origin and (b) the criterion of
"substantial transformation", where two or more countries have taken part in the production of
the goods. In this context, IMTS 2010 (para. 6.7) recommends that, while defining their national
rules of origin, countries follow the relevant provisions of the RKC. The substantial
transformation criteria are being elaborated on a product-specific basis, and are to be applied to a
good when more than one country is involved in its production.
16.8. Goods produced wholly in a given country. According to the RCK, goods produced
wholly in a given country shall be taken as originating in that country.165
Only the following
goods shall be taken to be produced wholly in a given country:166
(a) Mineral products extracted from its soil, from its territorial waters or from its sea-bed;
(b) Vegetable products harvested or gathered in that country;
(c) Live animals born and raised in that country;
164
See the RKC, Specific Annex K, Chapter 1, Definition E1./F2.
165 See the RKC, Specific Annex K, Chapter 1, Standard 2.
166 The list provided in the RKC is seen by some trade statistics compilers as not exhaustive, since certain goods that
appear to be wholly produced in a given country are not included (e.g., wheat).
207
(d) Products obtained from live animals in that country;
(e) Products obtained from hunting or fishing conducted in that country;
(f) Products obtained by maritime fishing and other products taken from the sea by a vessel
of that country;
(g) Products obtained aboard a factory ship of that country solely from products of the kind
covered by item (f) above;
(h) Products extracted from marine soil or subsoil outside that country's territorial waters,
provided that the country has sole rights to work that soil or subsoil;
(i) Scrap and waste from manufacturing and processing operations, and used articles,
collected in that country and fit only for the recovery of raw materials;
(j) Goods produced in that country solely from the products referred to in subparagraphs (a)
to (i) above.
16.9. Substantial transformation. Where two or more countries have taken part in the
production of the goods, the origin of the goods should be determined on the basis of substantial
transformation. According to the RKC definition of ―substantial transformation criterion‖, the
country of origin is the country in which the last substantial manufacturing or processing,
deemed sufficient to give the commodity its essential character, has been carried out.167
It is a
recommended practice that in applying the substantial transformation criterion, use should be
made of the International Convention on the Harmonized Commodity Description and Coding
System (HS Convention).168
It should be noted that the concept of ―essential character‖ is
defined neither in RKC nor in the HS Convention. However, the General Rules for the
Interpretation of the HS imply that articles classified in different subheadings of the HS have
different essential characters. Therefore, any manufacturing or processing that results in the
reclassification of a product in another HS subheading can be treated as a substantial
transformation. Where the substantial transformation criterion is expressed in terms of the ad
valorem percentage rule, the values to be taken into consideration should be:
(a) For the materials imported, the dutiable value at importation or, in the case of materials
of undetermined origin, the first ascertainable price paid for them in the territory of the country
in which manufacture took place;
(b) For the goods produced, either the ex-works price or the price at exportation, according to
the provisions of national legislation.
16.10. Operations that should not be regarded as substantial transformations. The RKC
stipulates that operations that do not contribute or that contribute to only a small extent to the
essential characteristics or properties of the goods, and in particular operations confined to one or
more of those listed below, should not be regarded as constituting substantial manufacturing or
processing:169
167
See RKC, Specific Annex K, Chapter 1, Definition E3./F1.
168 United Nations, Treaty Series, vol. 1503, No. 25910.
169 See RKC, Specific Annex K, Chapter 1, Recommended Practice 6.
208
(a) Operations necessary for the preservation of goods during transportation or storage;
(b) Operations to improve the packaging or the marketable quality of the goods or to prepare
them for shipment, such as breaking bulk, grouping of packages, sorting and grading, repacking;
(c) Simple assembly operations;
(d) Mixing of goods of different origin, provided that the characteristics of the resulting
product are not essentially different from the characteristics of the goods that have been mixed.
16.11. Special cases. There are certain special cases for which the RKC identifies the
recommended practice:
(a) Accessories, spare parts and tools for use with a machine, appliance, apparatus or vehicle
should be deemed to have the same origin as the machine, appliance, apparatus or vehicle,
provided that they are imported and normally sold therewith and correspond, in kind and
number, to the normal equipment thereof;170
(b) An unassembled or disassembled article that is imported in more than one consignment
because it is not feasible, for transport or production reasons, to import it in a single consignment
should, if the importer so requests, be treated as one article for the purpose of determining
origin;171
(c) For the purpose of determining origin, packings should be deemed to have the same
origin as the goods they contain unless the national legislation of the country of importation
requires them to be declared separately for tariff purposes, in which case their origin should be
determined separately from that of the goods;172
(d) For the purpose of determining the origin of goods, where packings are deemed to have
the same origin as the goods, account should be taken, in particular where a percentage method is
applied, only of packings in which the goods are ordinarily sold by retail.173
16.12. Note on certain inputs. It should be noted that for the purpose of determining the origin
of goods, no account shall be taken of the origin of the energy, plant, machinery and tools used
in the manufacturing or processing of the goods.174
16.13. Documentary evidence of origin. The trade statistics compiler should be aware that the
recommended practice is to require such evidence only when it is necessary for the application of
preferential customs duties, of economic or trade measures adopted unilaterally or under bilateral
or multilateral agreements or of measures adopted for reasons of health or public order.175
If
imported goods are being admitted to the country on a non-preferential basis and are not subject
170
Ibid., Recommended Practice 7.
171 Ibid., Recommended Practice 8.
172 Ibid., Recommended Practice 9.
173 Ibid., Recommended Practice 10.
174 Ibid., Standard 11.
175 Ibid., Chapter 2, Recommended Practice 2.
209
to any other customs controls requiring the evidence of their origin, the recorded country of
origin will be as indicated by the declarant. Small-value shipments and goods granted temporary
admission are also exempted from the requirement to proof origin.
3. The status of work on the harmonized rules of origin
16.14. WTO Agreement on Rules of Origin.176
The WTO Agreement on Rules of Origin
concerning objectives and principles, the establishment of committees, etc., came into force as
part of the Agreement Establishing the World Trade Organization in 1995. Since then, the
Technical Committee on Rules of Origin (TCRO), under the auspices of the World Customs
Organization (WCO) in Brussels, and the Committee on Rules of Origin (CRO), under the
auspices of the World Trade Organization in Geneva, have been undertaking work programme
set out in the Agreement and which aims at harmonizing the non-preferential rules of origin. The
Committees are to: (a) develop definitions of wholly obtained goods and of minimal operations
or processes that do not by themselves confer origin to a good (article 9 (2) (c) (i)); (b) elaborate
upon substantial transformation expressed by change in HS tariff classification (article 9 (2) (c)
(ii)); and (c) develop - in cases where the exclusive use of the HS nomenclature does not allow
for the expression of substantial transformation - supplementary criteria, such as ad valorem
percentages and/or manufacturing or processing operations (article 9 (2) (c)(iii));. The
harmonization work is still ongoing and thus the rules of origin themselves have not yet come
into force.
16.15. Application of the WTO Agreement on Rules of Origin. The WTO Agreement on Rules of
Origin, which will be obligatory for all WTO members, indicates such areas for their application
as most-favoured-nation treatment, anti-dumping and countervailing duties, safeguard measures,
origin marking requirements, quantitative restrictions and quotas. The Agreement specifically
provides that the WTO rules of origin, after their adoption, will ―include rules of origin used for
government procurement and trade statistics‖ (article 1 (2)).
16.16. Status of work. In 1999, the Technical Committee on Rules of Origin had concluded the
technical review of the Harmonized Rules of Origin and these final results were forwarded to the
Committee on Rules of Origin for consideration. As of 2011, these results were still under
consideration by the WTO. In June 2010, the CRO had reached consensus on 349 of the 486
technical questions submitted by the Technical Committee but the remaining 137 questions (the
most difficult ones) were still pending. The harmonization work programme could not be
completed owing to sensitive trade policy and political aspects and the very important question
of ―implications‖ of the Agreement on Rules of Origin for other WTO Agreements.177
On 11
November 2010, the Committee on Rules of Origin issued its latest draft consolidated text of
non-preferential rules of origin which are contained in the document G/RO/W/111/Rev.6. and
Corr.1. The text refers to HS96 and therefore needs to reflect the application of the current
176
See Legal Instruments Embodying the Results of the Uruguay Round of Multilateral Trade Organizations, done
at Marrakesh on 15 April 1994 (GATT secretariat publication, Sales No. GATT/(1994-7).
177 In its 2009 annual report, the Committee on rules of Origin acknowledged that members expressed considerable
differences of opinion regarding technical issues and aspects of the overall architecture of the draft scheme, and that
manufacturing sector rules of origin were still a matter of specific concern.
210
version of the HS (i.e., HS2012). There are currently 83 countries that have notified WTO of the
application of non-preferential rules of origin.178
4. Preferential rules of origin
16.17. Rules of origin in the case of preferential trade. Preferential rules of origin are used to
establish whether goods are eligible for special treatment under a trading arrangement between
two or more countries or customs unions. Preferential (or reduced) rates of duty are applied to
goods that are found to be the products or manufacture of a country defined as a preference
country. The principal objective of preferential rules of origin is to ensure that benefits are
restricted to those goods that originate and are traded within the particular preference area, i.e.,
those goods whose origin is from a particular specified country.
16.18. Requirements. Each multinational or bilateral agreement has its own rules of origin.
There is no work programme for the harmonization of preferential rules of origin. However,
annex II of the WTO Agreement on Rules of Origin (entitled ―Common Declaration with regard
to preferential rules of origin‖), provides the general principles and requirements applied to
preferential rules of origin. These requirements include notification procedures. All members
agree to provide to the WTO Secretariat, as soon as possible, their preferential rules of origin,
including a listing of the preferential arrangements, judicial decisions and administrative rulings
of general application relating to their preferential rules of origin, including any modification or
new preferential rules of origin. In particular, members agree to ensure that: (a) in the case
where the criterion of change of tariff classification is applied, such a preferential rule of origin,
and any exceptions to the rule, must clearly specify the subheadings or headings within the tariff
nomenclature that are addressed by the rule; (b) in the case where the ad valorem percentage
criterion is applied, the method for calculating this percentage shall also be indicated in the
preferential rules of origin; and (c) in the case where the criterion of manufacturing or processing
operation is prescribed, the operation that confers preferential origin shall be precisely specified.
16.19. It is advised that if a country‘s trade statistics are compiled using preferential rules of
origin with respect to certain countries, an appropriate explanation is provided in the
methodological note to the disseminated data.
5. Compilation of country of origin for imports
16.20. Application of Specific Annex K of the revised Kyoto Convention. Most countries broadly
follow Specific Annex K of the RKC with regard to the definition of both wholly produced and
substantially transformed goods. However, there is a significant divergence of views regarding
the details of the application of the Specific Annex. Which goods can be considered wholly
produced in a given country, and what kinds of transformations of the goods can be considered
substantial, remains, in many cases, a matter of trade dispute.
178
See the note by the Secretariat containing the seventeenth annual review of the implementation and operation of
the Agreement on Rules of Origin, conducted by the Committee on rules of Origin on 27 October 2011 (G/RO/71 of
2 November 2011).
211
16.21. National practices in defining wholly produced (obtained) goods. It is a good practice to
base national definitions of the wholly produced (obtained) goods on the RKC and elaborate the
provisions in certain commodity groups that might be of particular interest to the compiling
county.
16.22. National practices in defining substantial transformation. As the RKC does not contain a
detailed definition of the substantial transformation, especially with regard to the ad valorem
percentage rule, it is good practice to elaborate a national definition of this concept and make it
available to users in the trade statistics metadata. For example, in some regional blocs like the
Common Market for Eastern and Southern Africa (COMESA), the definition of substantial
transformation is based on the rules of origin contained in the RKC and is specified as value
addition to the product exceeding 35 per cent.
16.23. Practical difficulties in determining the country of origin. While having national rules of
origin in place is important, countries still face numerous challenges in practice in respect of
determining country of origin of imported goods. Difficulties arise for many reasons. For
instance, the information on origin with respect to different transactions may not be of the same
quality owing to variations in the requirements for producing documentary evidence. The
requirement of presenting a certificate of origin of goods is defined by the tariff law of countries
and does not apply to all goods entering or leaving a country. Further, compilers should be aware
that IMTS 2010 (para. 6.28) recommends that the economic territory (and not the statistical
territory) of trading partners constitute the basis upon which the statistics on trade by partner are
compiled, of which free zones and other territorial elements are part.
C. Use of country of last known destination in export statistics
16.24. Concept of country of last known destination. IMTS 2010 (para. 6.13), defines the
country of last known destination as ―the last country - as far as it is known at the time of
exportation - to which goods are to be delivered, irrespective of where they have been initially
dispatched to and whether or not, on their way to that last country, they are subject to any
commercial transactions or other operations that change their legal status‖.
16.25. The identification of the country of last known destination using customs records. It is
advised that the ―country of destination‖, as required on the customs declaration and recorded by
customs, be used as the partner for the purposes of export statistics, provided that customs rules
require exporters to identify, as far as it is known to them, the country to which goods are to be
ultimately delivered.179
The country of destination may be taken as the country of last known
destination if, at the time of exportation, no additional information is available regarding further
movement of the goods. It is also advised that compilers cooperate with customs in developing
and disseminating to exporters clear instructions regarding the reporting of such information.
Compilers should be aware, however, that customs are not normally engaged in systematic
verification of the correctness of information about the destination of most goods. The definition
of partner country is to be based on its economic territory (see IMTS, para. 16.23).
179
See SAD Guidelines - E17, Box 17: Country of destination: Using the relevant Community code from Annex 38,
enter in Box 17a the last country of destination of the goods to be exported as known at the time of export.
212
16.26. Use of non-customs sources. In the absence of customs records, or if compilers deem
them not reliable, it is advised that non-customs sources be examined. For example, ―country of
destination‖ may usually be found in the terms of delivery contained in the contract of sale, or
derived from shipping or other commercial documents. Compilers may use enterprise surveys
and reports of commercial banks and monetary authorities. Information contained in the
markings on outer packaging of the goods may also be helpful. This work is very time
consuming and it is good practice to restrict it to goods of a very high value or to specific
controlled goods.
16.27. Change of origin and the country of last known destination. During the delivery of goods
sent from one country to another, the goods may enter a third country and undergo processing
that will confer on them a new origin. It is advised that, in such a case, the exporting country
record that third country as the country of last known destination.
16.28. Verification of country of last known destination. In some cases trading partners‘ imports
data may be helpful in the verification of provided information and in the identification of the
final destination. If specific problems are identified, it is a good practise to inform and educate
the traders about the importance of the correct entry of the partner information. Also, countries
might consider making adjustments to the partner information, if there is evidence that, to a large
extent, a country of transit has been indicated by a declarant as the country of destination (e.g.,
China, Hong Kong SAR; and the Netherlands). The systematic and continuous use of such
methods may noticeably improve the statistics. Care should be taken to avoid double-counting
and adjust for mark-ups in partner-country values.
D. Use of country of consignment in import and export statistics
1. Concept of country of consignment
16.29. Country of consignment of imports and exports. Special attention should be given to the
determination of country of consignment in view of the new recommendations contained in
IMTS 2010 to compile this information. In general, the method of compiling data by the country
of consignment offers the possibility of obtaining consistent statistics and reasonable
comparability, since it promotes the symmetrical recording of the trade transactions by importing
and exporting countries (see IMTS 2010, paras 6.18-6.19). The combination of the information
on country of origin and country of last known destination as the first partner country with the
information on the county of consignment as second partner country should significantly
improve the trading partner information and facilitate the reconciliation of partner information
among trading partners, e.g., during trade negotiations.
16.30. Country of consignment for imports. The country of consignment for the purposes of
import statistics is the country from which goods were dispatched to the importing country,
without any commercial transactions or other operations that change the legal status of the goods
taking place in any intermediate country. If, before arriving in the importing country, goods enter
one or more further countries and are subject to such transactions or operations, the last
213
intermediate country where such transactions or operations were conducted should be taken as
the country of consignment.
16.31. Country of consignment for exports. The country of consignment for the purposes of
exports statistics is the country to which goods are dispatched by the exporting country, without -
as far as it is known at the time of exportation - being subject to any commercial transactions or
other operations that change the legal status of the goods taking place in any intermediate
country. If there are several intermediate countries, then the first intermediate country into which
goods enter after leaving the exporting country should be recorded as country of consignment.
2. Determination of country of consignment
16.32. Determination of country of consignment. The determination of country of consignment
depends on a clear and practical definition of commercial transactions or other operations that do
or do not change the legal status of the traded and/or shipped goods in intermediate countries. It
is good practice to provide such a list of commercial transactions or other operations that change
the legal status of goods. Change of ownership of the imported goods and their substantial
transformation should be included in such a list. In the European Union practice, for instance,
any halts not inherent in the transport of the goods are included in this list as well.
16.33. Difficulties in the determination of country of consignment. The determination of country
of consignment is not always straightforward in practice. For exports, there can be a lack of
knowledge about the destination of goods at the time of export, as goods can be redirected while
at sea or goods can be transhipped from the original country of consignment and therefore not
included in that country's imports thus creating the incomparability of partner statistics. For
imports, it is important that the country of consignment be not automatically identified as the
country from which goods were shipped.180
The transportation of goods from the country of
consignment to the country of last destination may involve the use of multiple shippers and
passage through several countries, so that at the time of the importation of goods, the country of
consignment and the country of shipment may or may not coincide. Compilers should be aware
that the country identified by the importer as the partner country will often be the country where
the last shipment arrangements were made rather than the country from which the goods were
consigned.
16.34. Use of customs and non-customs sources. Compilers should ensure that the relevant
customs records, if available, are collected, processed and incorporated in the trade statistics
database. If customs records do not exist or are not complete (e.g., the country of consignment
might not be included or ―country of consignment‖ might not be a mandatory field in the
customs declaration), non-customs sources should be used to the extent possible. It is good
practice to advise customs authorities on the increased importance of information on country of
180
The country of shipment (in the case of imports), is the country from which goods are shipped, whether or not
commercial transactions or any other operations that change the legal status of the goods occur after the goods are
dispatched from the exporting country. If such transactions do not occur, the country of shipment is the same as the
country of consignment (IMTS 2010, para. 6.12). The country of shipment (in the case of exports) is the country to
which goods are shipped, whether or not commercial transactions or any other operations that change the legal status
of the goods are expected to take place before arrival of the goods in that country (IMTS 2010, para, 6.5).
214
consignment and to cooperate with them in finding ways to ensure better availability of this
information in customs records. Countries that do not already compile country of consignment
information in the case of exports are encouraged to study the feasibility of such a compilation.
16.35. Special categories of goods. The country of consignment might be used as a sole partner
attribution provided to users in cases where country of origin is unknown or is deemed not
applicable by trade compilers. For example, in the case of antiques, used cars, aircraft or vessels,
the use of country of consignment might be preferable. In such cases, it is advised that the
partner-country attribution be unambiguous and clearly indicated as follows: (a) if country of
origin is not used, the ―country of origin‖ data field must be left blank while the ―country of
consignment‖ data field should contain the country of consignment name, or (b) if both country
of origin and country of consignment are known, then both fields are filled with the appropriate
country names (which can be the same or different).
E. Definitions of partner country in trade between members of a customs union
16.36. Requirements for partner information in intra-union trade. The partner attribution in the
case of intra-union trade depends on requirements of the custom union‘s member States
regarding the nature of their trade statistics. Those statistics may continue to be based on the
same criteria as apply to trade with third countries, that is, on country of origin for imports and
country of last known destination for exports. This attribution is easier to follow if customs
controls of movements of goods between member States are not entirely removed, and customs
records require identification of the country of origin and the country of destination. If such
customs records do not exist, compilers need to use non-customs sources to compile their trade
statistics, which will include identification of country of origin and country of last known
destination. If member States are regarded as one economic territory, and information regarding
origin and last known destination is not required for national use, the statistics of intra-union
trade might apply another definition of partner for intra-union trade that is more suitable or
adequate for customs union purposes (e.g., country of arrival or country of dispatch). However, a
member State might decide to use different criteria for partner attribution in its national trade
statistics than are applied to the data reported to the customs union secretariat, in which case the
data available from the customs union secretariat and those from the national statistical office
will be different.
16.37. Partner attribution according to the community concept: Example from the European
Union. For the reporting of intra-union trade data of member States to Eurostat according to the
community concept, the partner member State is the member State of consignment for arrivals
and the member State of destination for dispatches (see also para. 10.9). The member State of
consignment is defined as member State from which goods were dispatched to the reporting
member State, without any halts or legal operations taking place in any intermediate member
State that are not inherent in their transport. A halt is any temporary interruption of the physical
movement of the goods before movement is continued to the final destination. A legal operation
can be any commercial transaction or comparable operation covered by legislation (e.g., sale or
processing under contract). Halts or legal operations related to transport of the goods include, for
instance, a change of means of transport, preserving operations to keep the goods in good
condition during transport, breaking up and assembly of packages and temporary storage. In
215
practice, however, consignment is frequently approximated by shipment. ―Member State of
destination‖ refers to the last member State to which it is known, at the time of dispatch, that the
goods are to be dispatched.
F. Partner-country coding for statistical purposes
16.38. United Nations standard country or area codes for statistical use. Countries are
encouraged (see IMTS 2010, para. 6.28) to adopt the United Nations standard country or area
codes for statistical use provided on the UNSD website.181
This website provides names of
countries or areas together with the three-digit numerical codes used by UNSD for data-
processing purposes and the two- and three-digit alphabetical codes assigned by the International
Organization for Standardization (ISO). The website also lists and gives codes for a number of
geographical regions and economic, trade and other groupings of countries or areas. Compilers
are advised to take note of this website and consider using the United Nations coding system for
data-processing and reporting purposes if it is appropriate for their systems.
16.39. Trade with itself and trade with free zones (IMTS 2010, para. 6.29). It is possible that, in
the case of reimports (imports of domestic goods that were previously recorded as exports), a
country registers imports from itself as country of origin. Yet, it is neither recommended nor is it
a common practice to record exports to itself as the country of last known destination, even if the
return of the goods might be almost certain (e.g., after minor processing that does not change the
country of origin). Countries applying the strict or relaxed definition of the special trade system
may record trade (imports or exports) from and to their free zones (or premises for inward
processing or customs warehouses). The recording of trade with its free zones (or premises for
inward processing or customs warehouses) clearly indicates that the country does not use the
general trade system.
16.40. Detailed partner breakdown. Countries may wish, in national publications, to group
together countries for analytical purposes. However, IMTS 2010 (para. 6.30) recommends that in
their databases and in reporting to regional and international organizations, countries make their
data available with complete and most detailed partner breakdown.182
This will allow both
national and international users to aggregate countries into economic and geographical groupings
according to their own analytical requirements and will facilitate the estimation of trade for late
reporting or non-reporting countries.
181
http://unstats.un.org/unsd/methods/m49/m49.htm.
182 This is not applicable in cases when two (or several) countries consider themselves to be a single statistical
territory (e.g., France and Monaco).
217
Chapter XVII
Mode of transport (MoT)
17.1. Introduction. The present chapter elaborates on the recommendations contained in
IMTS 2010, chapter VII, on mode of transport. It contains a description of good practices in
respect to their implementation. Annex XVII.A contains a description of modes of transport for
IMTS purposes. Owing to its importance, the recommendation to compile international
merchandise trade statistics by mode of transport was reintroduced and strengthened in IMTS
2010. It had not been contained in the second revision of IMTS although it had been mentioned
in the first revision.183
A. Basic concepts
17.2. Recommendation. Availability of trade data by mode of transport (MoT) is very
important for many purposes, including monitoring international transport routes, formulating
transportation policy, assessing the impact of trade on the environment and conducting other
analytical efforts. In this context, IMTS 2010 (para. 7.1) recommends that:
(a) Countries compile and disseminate international merchandise trade statistics by mode of
transport at the most detailed commodity level (as a separate data dimension),
(b) The mode of transport that should be recorded is the means of transport used when goods
enter or leave the economic territory of a country.
It is a good practice to describe any diversions from these recommendations in the country‘s
metadata.
17.3. Mode of transport and means of transport. For the purposes of international merchandise
trade statistics, mode of transport is understood to be the method of transport used for the
carriage of goods.184
It is a specific solution which makes use of a particular type of means of
transportation such as aircraft, vehicle, vessel or other device used for the transport of goods or
persons. The transport of a person or of cargo may involve one mode or several modes of
transport, with the latter case being called multimodal transport. Each mode has its advantages
and disadvantages, and will be chosen by traders on the basis of cost, capacity, route and speed.
17.4. Classification of mode of transport for use in the compilation and reporting of the trade
statistics. To allow international comparability to the best possible extent, IMTS 2010 (para. 7.2)
provides a classification for use in the compilation and reporting of MoT trade statistics which is
reproduced below.
1. Air
2. Water
183
Studies in Methods, Series M, No. 52, Rev. 2 (United Nations publication, Sales No. E.98.XVII.16); and United
Nations publication, Sales No. E.82.XVII.14, respectively.
184 See Sect. V.A of Economic Commission for Europe document TRADE/CEFACT/2001/19 of 15 January 2001,
entitled ―Recommendation No. 19 (second edition): Codes for modes of transport‖, submitted to the Centre for
Trade Facilitation and Electronic Business (UN/CEFACT) for approval.
218
2.1 Sea
2.2 Inland waterway
3. Land
3.1 Railway
3.2 Road
4. Not elsewhere classified
4.1 Pipelines and cables185
4.1.1 Pipelines
4.4.2 Cables
4.2 Postal consignments, mail or courier shipments
4.3 Self-propelled goods
4.4 Other
B. Implementation and data sources
17.5. National classifications of modes of transport. IMTS 2010 (para. 7.2) encourages
countries to use the main categories (one-digit) of the above classification and, if countries so
wish, the detailed (two- or three-digit) categories. However, the above classification is not
intended to limit the flexibility of countries with respect to implementing a detailed national
classification according to their own requirements. Whatever classification is followed, it is
recommended that countries clearly describe in their metadata the contents of the categories
used. Depending on their national requirements, countries may wish to compile mode of
transport at the one-, two- or three-digit level or create even more detailed breakdowns for use in
the compilation and reporting of the trade statistics by mode of transport. Confidentiality rules
may significantly affect the level at which MoT detail can be published.
17.6. It is good practice to adopt a national classification that could be easily reconciled with
the international classification, at least at the level of the main categories. In particular, it should
be made clear whether postal consignments, mail or courier shipments and self-propelled goods
are separately classified or included in the main categories of air, water and land. The category
4.4 ―Other‖ is to be used when the available information does not allow an attribution of a given
transaction to any of the specific mode-of-transport categories.
17.7. Description of mode-of-transport categories. A description of MoT categories is
provided in annex 17.A to this chapter based on the Illustrated Glossary for Transport Statistics
(4th ed. 2009),186
prepared by the Intersecretariat Working Group (IWG Transport) comprising
representatives of ECE, the International Transport forum and Eurostat. Countries can use these
descriptions when defining the components of their national mode-of-transport classification.
17.8. Multimodal transport. The term ―multimodal transport‖ can be used in the case where
goods are carried by at least two different modes of transport, from a place within or at the
185
Breakdown of the category 4.1 into 4.1.1 Pipelines and 4.1.2 Cables can be applied if countries find it desirable
and feasible.
186 Eurostat Methodologies and Working Papers (Luxembourg, Publications Office of the European Union, 2010).
Available from http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-RA-10-028/EN/KS-RA-10-028-EN.PDF
219
border of the exporting country, at which the goods are taken in charge by a transport operator to
a place designated for delivery in the importing country187
. This is in accordance with the
definition of international multimodal transport in article 1(1) of the United Nations Convention
on International Multimodal Transport of Goods (24 May 1980) (which, however, is not yet in
force). If a country identifies th transport of certain goods as multimodal, it is good practice for it
to provide in the metadata information of how multimodal transport is defined, identified and
recorded. However, it should be pointed out that IMTS 2010 (para. 7.4) recommends the
recording of multiple modes of transports, depending on a country‘s needs and circumstances.
The recording of a separate category ―Multimodal transport‖ is not suggested and accordingly
not part of the suggested classification of MoT.
17.9. Predominant mode of transport. In certain cases, the information on MoT, defined as
means of transport when entering the economic territory and derived from customs records, is
not the most relevant information for analytical purposes; hence, some countries might wish to
use the concept of the predominant mode of transport. IMTS 2010 (para. 7.4), suggests that the
predominant mode of transport can, for example, be defined as the mode of transport that
accounts for the majority of the transportation costs or the longest part of the route by distance.
Countries should define such criteria and record predominant mode of transport in addition to the
means of transport when entering and leaving the country as necessary (i.e., in the case of
landlocked countries), taking into account their data needs and circumstances. It is good practice
for the reasons and for the methodology of such a determination of MoT to be clearly explained
in the trade statistics metadata.
17.10. Main data sources. The main data sources for the compilation of trade data by mode of
transport are the same as those for the compilation of other trade data, i.e., customs records and
the non-customs data sources described in chapters II-IV. However, countries might explore the
possibility of using additional sources. It should be noted that although there is a strong
correlation between point of entry and mode of transport, the attribution of MoT cannot be based
on the identification of point of entry only, and it is good practice to use mode of transport as
indicated in customs records188
.
17.11. Potential additional data sources. Some additional data sources (e.g., carrier- and
shipper-based sources) may contain useful supplementary information and can be used for
verification and estimation purposes.
17.12. Estimation of mode of transport data. In many instances, adequate sources of data might
be absent. If, however, there is a strong need for trade data by mode of transport, appropriate
estimation procedures can be developed and used. It is suggested that sources of information for
estimating MoT at different stages and levels of the compilation process be distinguished,
depending on user requirements. MoT could be estimated at the initial data-collection stage on
187
See the United Nations Conference on Trade and Development (UNCTAD) document entitled ―Implementation
of multimodal transport rules‖ (UNDTAD/SDTE/TLB/2) of 27 June 2011. Available from http://www.unctad.org/
en/docs/posdtetlbd2.en.pdf
188 In Brazil, MoT data are obtained from the entries in the field ―unit of the customs boarding or unloading‖ of
electronic documents for export and import of SISCOMEX.
220
the microlevel based on additional documentation for individual transactions, or at later data
compilation stages on the macrolevel, based, e.g., on enterprise surveys.
17.13. MoT and trade system. Under the general trade system, goods are recorded when they
leave the economic territory of a country, which coincides with the condition for the recording of
mode of transport (means of transportation when goods enter or leave the economic territory of
country). Countries following the special trade system would usually compile information on
MoT based on the mode of transport when goods enter or leave the statistical territory, which
could be, for example, the mode used to transport goods from a customs warehouse into a free
circulation area. This might, if significant, provide a misleading picture of a country‘s MoT
statistics. In this case countries might wish to consider presenting information on MoT in such a
way as to take into account the fact that goods might have entered the statistical territory from
free zones or customs warehouses. An appropriate explanation should be provided in trade
statistics metadata.
C. Country practices in the compilation of trade statistics by MoT
17.14. Country practices. Counties‘ experiences in the compilation of MoT data differ for
several reasons, including the use of different trade systems, availability of data sources, etc.
Examples of country experiences in compilation of trade data by MoT, including both good
practices and challenges, are provided below.
17.15. Country practice: United States of America. The United States applies the recommended
definition of MoT as the means of transport used when goods enter or leave the economic
territory. Further details can be summarized as follows:
(a) The data for ―all methods of transportation‖ include general exports and general imports
by vessel, air, truck, rail, air mail, parcel post, and other methods of transportation;
(b) The data for general exports and general imports transported by vessel and air represent
merchandise actually leaving or arriving in the United States aboard a vessel or an aircraft;
(c) Imports and exports of (i) vessels moving under their own power or afloat and (ii) aircraft
flown into or out of the United States are included in the "all methods" data but excluded from
the vessel and air statistics;
(d) Mail and parcel post shipments (including those transported by vessel or air) are included
in the "all methods" data but excluded from the vessel and air statistics;
(e) Estimated low-value shipments are included in the "all methods" data but excluded from
the vessel and air statistics;
(f) Imports out of United States customs bonded warehouses and foreign trade zones are
included in the ―all methods‖ data but excluded from vessel and air statistics;
(g) In some instances, shipments between the United States and countries abroad enter or
depart through Canada or Mexico. Such shipments are recorded under the method of
transportation by which they enter or depart from the United States regardless of the
transportation mode between Canada or Mexico and the country of origin or destination. For
221
example, if an item is shipped from China to Canada on a vessel, then shipped from Canada to
the United States on a truck, the statistics would show an import truck shipment from China.
17.16. Country practice: Canada. Canada follows the general trade system. The main features
of the Canadian experience are:
(a) Imports. For imports, the mode-of-transport information refers to the last mode of
transport by which the cargo was transported to the port of clearance in Canada and is derived
from the cargo control documents of Canadian customs. Therefore, shipments from, for example,
China destined for Canada may arrive at a port in the Western United States by marine mode and
arrive in Canada via rail. Such shipments are recorded as imports from China by rail in Canada‘s
merchandise trade statistics. Further, the recorded mode of transport may not be the mode of
transport by which the cargo arrived at the Canadian port of entry, if the cargo was cleared by
Canadian customs at an inland port. If, for example, the commodities imported from the United
Kingdom of Great Britain and Northern Ireland arrived by ship in Toronto but were not cleared
in Canada until they reached another city by truck, the mode reported in Canada‘s international
trade statistics will be ―truck‖.
(b) Exports. Exports by land modes of transportation frequently reflect Canada‘s trade with a
second country entailing transshipment through a third country, generally the United States. For
exports, the mode-of-transport information represents the mode of transport by which the
international boundary was crossed. For Canada‘s exports through the United States to other
overseas countries, the mode reported would be the mode used to cross the border between
Canada and the United States. If, for example, export shipments that are destined for the United
Kingdom travel by truck through Fort Erie, Ontario, and are then shipped by water from a United
States port to the United Kingdom, the mode reported in Canada‘s international trade data will be
―truck‖.
17.17. Country practice: Mexico. Mexico follows the general trade system and compiles MoT
trade statistics as follows:
(a) Imports: For imports, the MoT information represents the last mode of transport by
which the cargo was transported at the Mexican port of entry and is derived from the cargo
control documents of Mexico customs. This may not be the MoT by which the cargo arrived to
the port of clearance in Mexico, for those cases where the cargo was cleared by Mexico customs
at an inland port;
(b) Exports. For exports, the mode of transport information records the last mode of transport
with which cargo crossed the customs border on its exit from the country;
(c) The transportation authority, which is the Ministry of Communication and Transport,
provides data at a general level on the transported volume by mode; this information supplements
the data on value provided in the customs records.
17.18. Country practice: Germany.
(a) Imports. If imports are leaving the customs warehouse for free circulation, the mode of
transport at the time of entering the customs territory of the European Union (and not the mode
used for transportation when leaving customs warehouse) has to be reported in the customs
222
declaration. In case the importer is not able to identify that mode of transport, he or she has to
declare the presumable mode of transport;
(b) Exports. Exports are treated accordingly (presumable mode of transport when leaving the
customs territory).
17.19. Country practice: Brazil. Statistics of foreign trade are released including port of loading
and unloading and MoT. To determine the mode of transport for each operation, Brazil has
adopted the criteria set by IMTS 2010, that is, the mode of transport used at the moment when
goods enter or leave the country. Brazil has also adopted the IMTS 2010 recommendation to
classify modes of transport as follows: sea, air, railway, road, pipeline, cables, inland waterway
(divided into river and lakes), self-propelled goods, postal consignments, mail or courier
shipments, and others. In practice, these data are obtained from entries in the field ―unit of the
customs boarding or unloading‖ of the electronic documents for export and import of
SISCOMEX.
17.20. Quality issues. Obtaining high-quality trade data by MoT is a challenging undertaking. In
addition to the reporting errors that affect the general merchandise trade statistics, there are
reporting errors that specifically affect data tabulated by MoT. In general, the businesses or
individuals that report the data may not be the same individuals who physically convey the
shipments. This can lead to inaccurate information about how a shipment is transported and
where it enters or exits a country. It is good practice to develop various cross-checking
procedures and to document them in trade statistics metadata.
17.21. Quality assurance in the United States of America. The United States Census Bureau
quality assurance procedures include determining whether reported MoT codes and ports are
valid and performing relational checks between the ports and the method of transportation. With
a view to future, the Census Bureau is exploring obtaining transportation information directly
from the manifest, as reported by the carrier of the goods. To ensure quality, besides MoT and
port relationship checking, the Census Bureau also performs relational edits on MoT/HS
commodity and MoT/HS commodity/shipping weight. For example, a certain commodity such
as coal cannot be shipped by air nor can the shipping weight of a commodity shipped by vessel
exceed the maximum allowed.
17.22. The Census Bureau is substituting Canada‘s import statistics for data on United States
exports to Canada. In accordance with this data exchange, Canada requires its importers to
report the MoT by which the goods departed from the United States. However, Canada does
limited edit checks of this field, which can lead to the collection of inaccurate information for
exports to Canada. Additionally, Canada does not collect containerization information on the
United States exports as part of the data exchange and, this being the case, all containerized
value and shipping weights for exports to Canada are excluded.
D. Experiences in the dissemination of international merchandise trade statistics by MoT
17.23. Experience of the United States of America in the dissemination of international
merchandise trade statistics by mode of transport. The United States makes its international
merchandise trade statistics by MoT available in the following publications:
223
(a) U.S. imports of merchandise provides import statistics in various data fields for
Harmonized System (HS) commodities at the 2-, 4-, 6- and 10-digit level. Country and customs
district data for value, quantity, method of transportation, shipping weights, import charges,
duties etc., are provided on a monthly, year-to-date and annual basis;
(b) U.S. Merchandise Trade: Selected Highlights (FT920) provides data on value, charges,
insurance and freight (CIF), and shipping weight for general imports and imports for
consumption, by district of entry, district of unlading, world area, country of origin, and method
of transportation. Final data are released monthly;
(c) USA Trade Online provides port statistics by six-digit HS and country for value, shipping
weight, and method of transportation. State export statistics that include six-digit HS or four-
digit North American Industrial Classification System (NAICS) and country are provided for
value, shipping weight and method of transportation;
(d) U.S. exports by port and U.S imports by port provides export and import statistics by port
of export and port of unlading, respectively, for commodities at the six-digit HS level for value,
shipping weight, and method of transportation on a monthly, quarterly or annual basis;
(e) Trans-border statistics files: United States imports and exports from and to Mexico and
Canada and United States imports and export transshipments through Mexico and Canada in
disaggregated MoT are provided to the United States Bureau of Transportation Statistics (BTS).
These data, which include separate details on land (e.g., truck, rail) and other modes (e.g., mail,
flyaway aircraft), are published by the Bureau.
17.24. Cooperation between Canada, Mexico and the United States. Box XVII.1 provides
information on the North American Transportation Statistics Online Database (NATS-OD).
Box XVII.1
North American Transportation Statistics Online Database (NATS-OD)
The NATS-OD database a presents information on transportation and transportation-
related activities among Canada, the United States and Mexico, both within individual
countries and between countries. This database, presented in French, English and Spanish, is
accessible in table and time-series formats, and covers 12 thematic areas, including
transportation and the economy, transportation safety, transportation‘s impact on energy and
the environment, passenger and freight activity, and transportation and trade.
The data contained in the NATS-OD database are products of the North American
Transportation Statistics Working Group within the North American Transportation Statistics
Interchange, a trilateral initiative among the transportation and statistical agencies of Canada,
the United States and Mexico. Under way since 1991, the Interchange provides a forum for
the exchange of information and for the discussion of topics and issues related to
transportation statistics among the participating countries.
The primary participating agencies include Statistics Canada and Transport Canada
(Canada); the Secretaría de Comunicaciones y Transportes (SCT) (Ministry of
Communications and Transportation), the Instituto Mexicano del Transporte (IMT) (Institute
of Transportation of Mexico) and the Instituto Nacional de Estadística y Geografía (INEGI)
(National Institute of Statistics and Geography) ( Mexico); and the Bureau of Transportation
Statistics (BTS) (United States Department of Transportation) and the U.S. Census Bureau
224
(United States). Other agencies within the three countries have participated and provided data
and expertise.
Major objectives of the North American Transportation Statistics Working Group are
to: (a) identify key information which will help provide a comprehensive view of
transportation in North America, (b) characterize transportation activity and impacts across
and between Canada, Mexico and the United States, (c) reveal specific data comparability
differences among countries, (d) identify data and information gaps and (e) initiate
discussions on reducing comparability differences and data gaps through cooperative
activities.
The focus is on data, methodology and analysis that enable the provision of information
needed to support a safe, environmentally sustainable and integrated transportation system for
North America; for this reason, the three countries have developed comparable key indicators
of transportation activity such as merchandise trade by MoT.
a Available from http://nats.sct.gob.mx/nats/sys/index.jsp?i=3.
225
Annex XVII.A.
Description of modes of transport for IMTS purposes
Code Heading Description (tentative, for orientation only)
1 Air Any movement of goods and/or passengers on an aircraft
2 Water Any movement of goods and/or passengers undertaken wholly
or partly at sea or on navigable inland waterways using merchant
ships or inland water transport (IWT) vessels
2.1 Sea Any movement of goods and/or passengers using merchant ships
on journeys that are undertaken wholly or partly at sea. One-port
transport (movements of goods shipped to offshore installations,
or for dumping at sea, or reclaimed from the seabed and
unloaded in ports) is included. While bunkers and stores
supplied to vessels in port are excluded, bunker oil shipped to
vessels offshore is included. Fluvio-maritime movements of
goods by merchant ships are included. Movements of goods on
vessels of inland waterways between seaports and inland
waterway ports are excluded (they are included in inland
waterway transport). Movements of goods carried internally
between different basins or docks of the same port are excluded.
2.2 Inland waterway Any movement of goods and/or passengers using IWT vessels
that is undertaken wholly or partly on navigable inland
waterways.
Bunkers and stores supplied to vessels in port are excluded.
When an IWT vessel is being carried on another vehicle, only
the movement of the carrying vehicle (active mode) is taken into
account
3 Land Any movement of goods and/or passengers using a railway or
road vehicles on a given railway or road network
3.1 Railway Any movement of goods and/or passengers using a railway
vehicle on a given railway network. When a railway vehicle is
being carried on another railway vehicle, only the movement of
the carrying vehicle (active mode) is considered. A railway
network is understood as comprising all lines of communication
made up by rail exclusively for the use of railway vehicles. A
railway vehicle is a mobile equipment running exclusively on
rails, moving either under its own power (tractive vehicles) or
hauled by another vehicle (coaches, railcar trailers, vans and
wagons)
3.2 Road Any movements of goods and/or passengers using a road vehicle
on a given road network. When a road vehicle is being carried
on another vehicle, only the movement of the carrying vehicle
(active mode) is considered
4 Not elsewhere
classified
Any movements of goods not separately classified in headings 1,
2 and 3
226
4.1 Pipeline and cables Any movement of liquid products in a given pipeline or cable
network
4.1.1 Pipeline Any movement of crude or refined liquid petroleum products or
gases in a given pipeline network. Pipelines covering flow of
water are covered here as well
4.4.2 Cable Any movement of products in a given cable network, e.g., power
lines carrying electricity
4.2 Postal
consignment, mail
or courier shipment
Any movement of goods via postal, mail or currier shipment
4.3 Self-propelled
goods
As an example, an aircraft flown out of the compiling country
under its own power should be classified as self-propelled
4.4 Other To be used when available information does not allow a
transaction to be attributed to any specific mode of transport
category (see IMTS 2010, para 7.3) Based on the Illustrated Glossary for Transport Statistics (4th ed. 2009), prepared by the Intersecretariat Working
Group (IWG Transport) comprising representatives of ECE, the International Transport forum and Eurostat.
227
Chapter XVIII
Customs procedure codes
18.1. Introduction. IMTS 2010 (paras. 2.19 and 8.6) recommends that information about the
customs procedures applied to individual transactions be part of the data set provided by customs
to the agency responsible for the compilation of trade statistics. It is good practice to include
customs procedure code as an additional data field in the data set used for international reporting.
The present chapter explains the significance as well as the limitations of this new data field, and
describes experiences of countries that obtain and use this information.
A. Customs procedure code as a new data field
18.2. Request for customs procedure code as a new data field. Following the adoption of the
revised recommendations contained in IMTS 2010, the United Nations Statistics Division and
the Organization for Economic Cooperation and Development (OECD) revised their data request
to countries189
to include the following four new data items: (a) second partner country or area,
(b) second value for imports (FOB), (c) mode of transport and (d) customs procedure code (or
applicable transaction code) (see table XVIII.1 for details).190
The TF-IMTS as well as the EG-
IMTS have been informed about these new data items.
Table XVIII.1
New data fields following the adoption of IMTS 2010a
Field name Recommended field content
Second partner country or area In national nomenclature; country of consignment
for imports and country of consignment
(destination) for exports
Second value for imports Monetary value (in national currency or United
States dollars); FOB
Mode of transport The means of transport used when goods enter or
leave the economic territory (in the encouraged
nomenclature provided in IMTS 2010, para. 7.2 or
national nomenclature)
Customs procedure code (or
applicable transaction code)
Code of the customs procedure applied to
individual transactions by customs; any applied
procedure or transaction code if customs procedure
codes are not available or if additional codes are
used a See table VIII.1 for further information.
189
UNSD and OECD cooperate in the collection of annual merchandise trade data. OECD requests the data from
its member countries and immediately forwards the received data to UNSD. Starting in 2013, UNSD will take over
responsibility for data collection for all countries, including OECD member countries.
190 The revised data request is available from UNSD website at http://unstats.un.org/unsd/trade/IMTS/
datacollection.htm.
228
B. IMTS 2010 recommendation
18.3. Information about applied customs procedures. IMTS 2010 (para. 2.19) recommends that
information about the customs procedure applied to individual transactions (or the nature of
transaction) be included in the data set for trade statistics in order to facilitate the identification
of re-exports and reimports but also of other types of trade, such as goods for processing, trade
between related parties, goods on consignment etc. as far as possible. It further recommends that,
if the customs is not the agency compiling trade statistics, this information be regularly included
in the data set provided by customs to the agency responsible for the compilation of trade
statistics of a country. IMTS 2010 (para. 8.6) reiterates this recommendation and recommends
that information about the customs procedures applied to individual transactions be part of the
data set provided by customs to the agency responsible for the compilation of international
merchandise trade statistics.
C. Importance of compilation and international reporting
18.4. Importance of the information on customs procedure codes. Information on the custom
procedures applied to individual transaction are of critical importance for the compilation of
IMTS, as those procedures indicate whether certain transaction should be included in or excluded
from trade statistics (IMTS 2010, paras. 8.5 and 8.6). For example, the ASYCUDA system uses
customs procedure codes for determining the trade type (system) and flow.191
Further, customs
procedures might be used for the separate identification (recording) of certain types of trade
transactions such as those involving goods for processing and intra-firm trade (see chaps. XX
and XXI for further information). In general, the customs procedure applied to an individual
transaction frequently contains information about the purpose of the transaction, which is useful
for analytical purposes.
18.5. Often, the information on customs procedure codes is not included in the data set
provided by customs to the trade statisticians, possibly because, in the past, this information not
was often seen as suitable or relevant for statistical purposes. However, owing to globalization,
goods production processes are increasingly split up across many countries. Therefore, there is
now a very strong need to obtain additional information about the nature of the trade transactions
so that the impact of trade on and its relationship to employment, growth and the environment
can be analysed.
18.6. Limitations of information and compilation issues. Most countries broadly follow the
revised Kyoto Convention (RKC) and apply certain standard customs procedures.192
However,
countries have usually developed their own, often extensive, set of customs procedures which
suit their administrative needs, and might apply multiple procedures to the same transaction.
Hence, the information on the application of customs procedures might not automatically, or for
all countries, result in any consistent and therefore usable statistical information. Also, it might
191
The Automated System for Customs Data (ASYCUDA) is a computerized customs management system which
covers most foreign trade procedures. For further details, see chap. VIII and annex XVIII.A at the end of this
chapter.
192 See chapter II, sects. B and C, of this Manual.
229
be difficult to make the national information internationally comparable. One practical
consideration is that the differentiation of trade transactions by customs procedure codes might
significantly increase the data set.
18.7. Minimum goals for the future. The development of the information on customs
procedures into relevant and internationally comparable data is expected to take several years.
The minimum goal in the near future would be for all countries to be able to identify re-exports,
reimports, and goods for processing in their trade data, and to make this information available to
all users. An important intermediate step in this regard would be to create an inventory of the
customs procedures that are currently applied by individual countries, and to make it publicly
and conveniently available to users.
D. Customs procedures applied by countries
18.8. Revised Kyoto Convention. The RKC identifies a set of customs procedures, and provides
standards and recommended practices regarding those activities. The majority of countries are
believed to apply the main customs procedures identified in the RKC. However, there is at this
time little information on which customs procedures are applied by individual countries.
18.9. Customs regime codes used in merchandise trade statistics of China. China Customs
developed an extensive set of customs procedures to suit the needs for customs control and trade
statistics. The customs procedure code has 4 digits, of which the last 2 digits correspond to the
customs regime code that identifies 19 different types of trade for the purpose of compilation of
China‘s international merchandise trade statistics (see table XVIII.2)
Table XVIII.2
Customs regime codes used in the international merchandise trade statistics of China
Code Description
10 Ordinary trade
11 Aid or donation between Governments or by international
organizations
12 Other donation
13 Compensation trade
14 Processing and assembling (inward processing, type I)
15 Processing with imported materials (inward processing, type II)
16 Goods on consignment
19 Border trade
20 Equipment for processing trade
22 Contracting projects
23 Goods on lease
25 Equipment or materials imported as investment by foreign-invested
enterprises
27 Outward processing
30 Barter trade
31 Duty-free commodities on payment of foreign currency
230
33 Customs warehousing trade
34 Entrepôt trade by bonded area
35 Equipment imported into export processing zone
39 Other
18.10. Customs procedure codes (CPC) used in the Philippines. The CPC (four-digit code plus
three-digit extension) is found in box 37 of the import entry and internal revenue declaration. See
Table XVIII.3 for the list of four-digit codes used in the Philippines.
Table XVIII.3
Customs procedure codes (CPC) used in the Philippines
Code Description
1000 Permanent export of domestic origin
1021 Permanent export after temporary export for customs outward
processing procedure
1022 Permanent export after temporary export for return in unaltered state
1100 Permanent export of duty and tax-free import
1240 Permanent export of duty and tax-paid import
2100 Temporary export under customs outward processing procedure
2200 Temporary export for return of goods in unaltered state
3052 Re-export after customs inward processing procedure
3053 Re-export after temporary admission for return in unaltered state
3071 Re-export after customs warehousing procedure
4000 Direct entry for home use
4052 Entry for home use after temporary import procedure
4053 Entry for home use after temporary admission for return in unaltered
state
4071 Entry for home use after customs warehousing procedure
4088 Consumption entries transshipped
4100 Direct import under drawback procedure
4500 Informal entry (commercial goods)
4588 Informal entry after transshipment (commercial goods)
4600 Informal entry (non-commercial goods)
4688 Informal entry after transshipment (non-commercial goods)
4900 Consumption entries short-shipped
5200 Temporary import for customs inward processing procedure
5300 Temporary import for return of goods in unaltered state
5371 Temporary import for return in unaltered state after customs
warehousing
6021 Reimport after temporary export for customs outward processing
procedure
6022 Reimport after temporary export for return of goods in unaltered state
7100 Direct entry for customs warehousing procedure
231
7152 Entry for customs warehousing after temporary import for inward
processing
7171 Change of warehouse
7188 Warehousing entries transshipped
7271 Withdrawal permit (warehouse to store)
7300 Temporary import for constructive warehousing
7700 Transfer from warehouse to another warehouse
7800 Transhipment entry to warehouse
7900 Entry for customs warehousing short-shipped
8800 Transhipment
18.11. Harmonization of customs procedure codes in the Common Market for Eastern and
Southern Africa (COMESA). COMESA has achieved, for the majority of its member countries, a
harmonization of customs procedures and has enabled this information to be automatically
included in the data set provided to statistical agencies. Based on this dataset, countries are able,
for example, to provide their data following both the special and the general trade system. For
further details see annex XVIII.A.
18.12. European Union practice. In the European Union, the following elements of information
are compiled: (a) customs procedure code, (b) statistical procedure code, and (c) nature of
transaction code. The customs procedure code defines the difference between general and
special trade, while the transaction code determines other factors like change of ownership. See
annex XVIII.B for the list of nature-of-transaction codes used in the Extrastat system of the
European Union.
232
Annex XVIII.A.
Harmonization of customs procedure codes in the Common Market for Eastern and
Southern Africa (COMESA)
18.A.1. Background. The COMESA Common Statistical Rules (CSR), which were adopted by
the Council of Ministers at Lusaka in April 1997, stipulate the use of recommended COMESA
customs procedure codes (CPC) to determine the flow of goods by trade types. By 2007, out of
19 COMESA member States, 9 had migrated to ASYCUDA++ and 5 others are at the various
implementation stages. Thus, COMESA found it necessary to revise the provisions of the CSR to
align it with the ASYCUDA++ format.193
18.A.2. Composition of the customs procedure code. The complete set of the ASYCUDA++
seven-digit CPC consists of a four-digit extended procedure code and three-digit
additional/national codes for national purposes. The extended procedure code is made up of two
parts, the requested procedure and the previous procedure. The requested procedure comprises
the first two numbers of the four-digit extended procedure. It represents the customs procedure
that is being asked for. The previous procedure comprises the last two digits of the four-digit
extended procedure and represents any previous customs procedure under which the goods
concerned have been entered. Both the requested and the previous procedures are derived from
the general procedures shown in box XVIII.A.1 and which are based on the Standard CPC
Regimes Type or Model of Declaration (see box XVIII.A.2). For example, goods for import into
a bonded warehouse would be entered under extended procedure 7100, which comprises
requested procedure ―71‖ (Warehousing) and previous procedure ―00‖ (No previous procedure).
The list of extended procedures is provided in box XVIII.A.3. Special national rebates, etc., are
handled by the last set of three digits that make up the complete set of the ASYCUDA++ seven-
digit CPC. These additional/national codes follow, as closely as possible, national laws of
member States.
18.A.3. COMESA customs procedure codes. The combination of extended procedure and
additional/national codes results in about 350 customs procedure codes recommended for use by
COMESA member States. Table XVIII.A.1 provides, as example, the custom procedure codes
for the Standard CPC Regimes Type or Model of Declaration of Exportation (―EX 1‖).
Box XVIII.A.1
General procedures
10 Direct/outright exportation
20 Excise
21 Temporary export for outward processing/repairs
22 Temporary export for return in an unaltered state
30 Re-exportation
40 Importation for home use
51 Temporary importation for return in an unaltered state
52 Temporary importation for inward processing/repairs
193
See the COMESA report entitled ―COMESA Regional CPC Consultancy Project: October-December 2007‖,
authored by R. Magadzire and J. Manirambona.
233
60 Reimportation
71 Warehousing
78 Export processing zones/free trade zones
80 Removal in bond (inward transit)
81 Removal in transit (through transit)/transhipment
90 Other import procedures being travellers imports
Box XVIII.A.2
Standard CPC Regimes Type or Model of Declaration
EX 1 Exportation
EX 2 Temporary export
EX 3 Re-export
EXC 2 Excise
IM 4 Entry for home use
IM 5 Temporary importation
IM 6 Reimportation
IM 7 Warehousing/free trade zones
IM 8 Removal in bond/removal in transit (transit/transshipment)
IM 9 Other import procedures being travellers imports (private importations)
Box XVIII.A.3
List of extended procedures
1000 Direct permanent export
1040 Direct permanent export after entry for home use
1052 Direct permanent export after temporary importation for inward processing
1071 Direct permanent export for excisable goods ex-warehouse
1078 Exportation of manufactured /processed goods from an export processing
zone/international free trade zone
2000 Entry for excisable goods
2100 Temporary exports for outward processing
2171 Temporary exports for outward processing of goods ex-warehouse
2200 Temporary exports for return in an unaltered state
2271 Temporary exports for return in an unaltered state of goods ex-warehouse
3040 Re-export after entry for home use
3051 Re-export after temporary import
3052 Re-export after customs inward processing procedure
3071 Re-export after warehousing
3078 Re-exportation of goods from an export processing zone/international free trade zone
(export in bond)
4000 Entry for home use (general)
4051 Entry for home use after temporary import and return in an unaltered state
4052 Entry for home use after temporary import for inward processing
234
4071 Entry for home use ex-warehouse
4078 Entry for home use, ex-export processing zone/free zone, general entry
4080 Entry for consumption ex-removal in bond
4081 Entry for consumption ex-removal in transit
5100 Temporary import for return in unaltered state
5200 Temporary import for customs inward processing procedure
5271 Temporary import for customs inward processing procedure ex-warehouse
5280 Entry for inward processing ex-removal in bond
6010 Reimportation after outright exportation
6021 Reimport after temporary export for outward processing procedure
6022 Reimport after temporary export for return of goods in an unaltered state
7100 Direct entry for customs warehousing procedure
7171 Re-warehousing of goods at the same port
7180 Entry for customs warehousing procedure after removal in bond
7181 Entry for customs warehousing procedure after removal in transit
7800 Entry of goods into an export processing zone/international free trade zone
8000 Removal of goods in bond
8071 Removal of goods in bond ex-warehouse
8100 Removal in transit
8180 Removal of goods in transit ex-removal in bond
8181 Transshipment of goods in transit under customs control
9000 Private importations
9071 Private imports ex-warehouse goods, general entry
9080 Private imports ex-removal in bond goods, general entry
Table XVIII.A.1
Harmonized CPCs: example, EX 1 (exportation)
ASY++ code Trade type Standard Description
1000 000 2 Exportation of goods from open market
1000 105 2 Exportation of goods by the Government or Government
organizations
1000 110 2 Exportation of goods by diplomatic missions/foreign
embassies/diplomatic personnel
1000 115 2 Exportation of goods under customs/trade agreements entered
into by the Government
1000 120 2 Exportation of goods where industrial drawback of duty is to be
claimed
1040 130 2 Exportation of goods after entry for home use under national
manufacturing schemes
235
1052 000 2 Exportation of compensating products after temporary imports
for inward processing
1071 000 S Exportation in bond of locally manufactured goods subject to
excise duty (export in bond)
1078 000 2 Exportation of manufactured/processed goods from an export
processing zone/international free trade zone Key to trade types: 2: applicable in the case of both special and general trade types; S: applicable in the case of
special trade type, only
236
Annex XVIII.B.
Nature of transaction codes for Extrastat a
A B
1. Transactions involving actual or intended
transfer of ownership from residents to
non-residents against financial or other
compensation (except the transactions
listed under 2, 7, 8)
1. Outright purchase/sale
2. Supply for sale on approval or after trial,
for consignment or with the
intermediation of a commission agent
3. Barter trade (compensation in kind)
4. Financial leasing (hire-purchase)a
9. Other
2. Return and replacement of goods free of
charge after registration of the original
transaction
1. Return of goods
2. Replacement for returned goods
3. Replacement (e.g., under warranty) for
goods not being returned
9. Other
3. Transactions involving transfer of
ownership without financial or in-kind
compensation (e.g., aid shipments)
4. Operations with a view to processingb
under contract (no transfer of ownership
to the processor)
1. Goods expected to return to the initial
country of export
2. Goods not expected to return to the initial
country of export
5. Operations following processing under
contract (no transfer of ownership to the
processor)
1. Goods returning to the initial country of
export
2. Goods not returning to the initial country
of export
6. Particular transactions recorded for
national purposes
7. Operations under joint defence projects or
other joint intergovernmental production
programmes
8. Transactions involving the supply of
building materials and technical
equipment under a general construction
or civil engineering contract for which
no separate invoicing of the goods is
required and an invoice for the total
contract is issued
237
9. Other transactions which cannot be
classified under other codes
1. Hire, loan, and operational leasing longer
than 24 months
9. Other
Source: Commission Regulation (EU) No. 113/2010 of 9 February 2010, annex II. a Financial leasing covers operations where the lease instalments are calculated in such a way as to cover all or
virtually all of the value of the goods. The risks and rewards of ownership are transferred to the lessee. At the end of
the contract the lessee becomes the legal owner of the goods. b Processing covers operations (transformation, construction, assembling, enhancement, renovation …) with the
objective of producing a new or really improved item. This does not necessarily involve a change in the product
classification. Processing activities on a processor‘s own account are not covered by this item and should be
registered under item 1 of column A.
Part four. Compilation of data on trade in selected categories of goods
241
Chapter XIX
Scope of IMTS
19.1. Introduction. The present chapter is based on chapter I of IMTS 2010 on scope and time
of recording. This chapter elaborates on the implementation of the general guideline for
recording, in IMTS, all goods that add to or subtract from the stock of material resources of a
country by entering (imports) or leaving (exports) its economic territory. Section A provides an
interpretation of the general guideline for the recording of goods as contained in IMTS 2010.
Section B focuses on the definition and comparison of categories of goods that might be difficult
to distinguish, such as goods on consignment and goods for processing, etc. Section C discusses
trade in categories of goods where the application of the concept of economic territory requires
further explanation, such as trade in ships and aircraft. Sections D deals with the issues of cross-
border trade and smuggling; and Section E, with the customs and statistical threshold, treatment
of non-response, confidential data and the omission of data. Chapters XX-XXIV deal with
additional categories of goods that are within the scope of IMTS but that are difficult either to
identify separately or to compile.
A. The general guideline
19.2. Recommendation. As a general guideline, it is recommended that international
merchandise trade statistics record all goods that add to or subtract from the stock of material
resources of a country by entering (imports) or leaving (exports) its economic territory. The
general guideline is subject to the clarifications provided in chapter I as well as other chapters of
IMTS 2010 and, in particular, to the specific guidelines set out in IMTS 2010, chapter I,
section B.
19.3. Interpretation of the general guideline. The recommendation establishes two criteria for
the recording of goods. First, goods have to physically enter or leave the economic territory and,
second, the goods need to add or subtract from the stock of material resources of a country. The
interpretation of this general guideline depends on what is to be understood as a good, what is to
be considered the economic territory, and what it means for goods to be part of the stock of
material resources of a country. IMTS 2010 provides definitions of all three terms (IMTS 2010,
paras. I.5 to I.7). The discussion of specific categories of goods in this and subsequent chapters
of part four, on the compilation of data on trade in selected categories of goods, touches upon
these three definitions.
B. Comparison of specific categories of goods
19.4. Table XIX.1 below summarizes the definition and comparison of categories of goods that
might be difficult to distinguish.
242
Table XIX.1
Definition and comparison of specific categories of goodsa
Category of
good
Definition IMTS 2010 Distinguish from Additional
considerations
Goods on
consignment
(IMTS 2010,
para. 1.17)
These are goods
intended for sale but
not actually sold
when they cross the
border
Include Goods being simply
transported through a
country or
temporarily admitted
or withdrawn are to
be excluded (see
IMTS 2010, paras.
1.41-1.44)
Goods on
consignment
can be returned
but their
identification
as returned
goods might be
difficult
Goods for
processing with
or without
change of
ownership
(IMTS 2010,
paras. 1.19-
1.21)
Goods for processing
are goods that are
sent abroad or
brought into a country
under a specific
arrangement between
the involved parties
(which may or may
not include the
change of ownership)
and for specific
operations as defined
by the statistical
authorities of the
compiling country
Include and
identify
separately
Goods for repair and
maintenance are to
be excluded but to be
separately recorded
(IMTS 2010, para.
1.57)
Identify
separately
goods for
processing
where no
change of
ownership
takes place;
identify
separately re-
exports and
reimports
Goods for
storage/goods
transferred from
or to a buffer
stock
organization
(IMTS 2010,
para. 1.27)
A buffer stock
organization is one
that maintains a stock
of certain
commodities and sells
or buys them in order
to influence supply
and demand on the
world market
Include Goods being simply
transported through a
country or
temporarily admitted
or withdrawn are to
be excluded (see
IMTS 2010, paras
1.41-1.44)
Goods simply
being
transported
through a
country
(IMTS 2010,
paras. 1.41-
1.42)
Goods are considered
as simply being
transported through a
country if they (a)
enter and leave the
compiling country
solely for the purpose
of being transported
to another country,
(b) are not subject to
Exclude Goods that add to or
subtract from the
stock of material
resources of a
country by entering
(imports) or leaving
(exports) its
economic territory
Goods simply
being
transported
include goods
under "in
transit" or "in
transshipment"
customs
procedures but
are not limited
243
Category of
good
Definition IMTS 2010 Distinguish from Additional
considerations
halts not inherent to
the transportation and
(c) can be identified
when both entering
and leaving the
country
to them
Goods
temporarily
admitted or
dispatched
(IMTS 2010,
paras. 1.43-
1.44)
At the time of
admission/dispatch, it
is known that their
intended stay in the
receiving country is
temporary (as defined
by the statistical
authority of a
country) and after
their stay they can be
withdrawn/returned in
the same state (except
for normal wear and
tear). This category
includes, but is not
limited to, goods
identified in the
Kyoto Convention
and the Convention
on Temporary
Admission (Istanbul
Convention) as goods
covered by the
"temporary admission
subject to re-
exportation in the
same state" customs
procedure
Exclude Goods for processing
and goods under
financial lease are to
be included (see
IMTS 2010, paras.
1.19-1.21 and 1.28)
It may not be
known whether
admitted or
dispatched
goods are
expected to be
brought back
within a
limited time
period.
Countries may
wish to use one
year (or less)
of stay as an
approximation
for temporary
admission
244
Category of
good
Definition IMTS 2010 Distinguish from Additional
considerations
Goods for
repair or
maintenance
(IMTS 2010,
para. 1.57)
This category
comprises goods
temporarily crossing
borders for repair or
maintenance abroad.
Such activities
reinstate or maintain
the quality of the
goods and do not
result in the creation
of a new product
Exclude but
identify
separately
This category does
not include goods
temporarily admitted
or dispatched (see
IMTS 2010, paras.
1.43 and 1.44),
which are to be
excluded, or goods
for processing (see
IMTS 2010, paras.
1.19-1.21), which are
to be included
The
identification
of goods for
repair or
maintenance
should be
determined in
cooperation
with balance-
of-payments
compilers
a Note: Re-exports (and reimports) are part of exports (imports) and not a specific category of goods for inclusion or
exclusion in the sense of this table, as they are always to be included. Re-exports are exports of foreign goods that
were previously recorded as imports and reimports are imports of goods that were previously exported. It is
recommended that re-exports and reimports be separately identified (see IMTS 2010, paras. 2.16-2.18). Goods for
processing constitute the category of goods operation upon which usually entails a re-export and reimport unless the
processing operations conveys origin or the processed goods remain (e.g., are sold) in the country where the
processing takes place (see chap. XX for details). Goods on consignment can be returned and should in this case be
identified as re-exports (in the country of initial import) and reimports (in the country of initial export) at return.
19.5. Example involving goods on consignment.194
In a typical case involving goods on
consignment, goods are sent to a marketplace specific for that type of goods in another country
for the purpose of their being sold. Such marketplaces can exist for diverse goods, such as live
animals, cars and crude oil. The marketplace brings together buyers and sellers. The physical
inspection of the goods at local or global distribution centres or changes in market conditions
might result in the goods‘ not being sold and subsequently returned. There might be many other
situations and circumstances in which goods are sent to another country to be sold but are
returned after not being sold.195
19.6. Example involving goods for processing. Global manufacturing and global production
chains exist for many products such as cars and electronic devices such as mobile phones). In all
such cases, parts of the production process and the manufacturing of the components of the final
product take place in several countries. In this sense, all trade transactions that precede the
shipment of the final product can be regarded as constituting trade in goods for processing.
19.7. Example involving goods for storage. Certain important commodities such as oil and gas
194
Goods on consignment in this Manual refer to goods on consignment as defined in IMTS 2010. Countries might
have additional and divergent definitions of goods on consignment and a specific customs procedure for those goods
which might or might not be in line with the above statistical meaning of the term given in IMTS 2010. In the
revised Kyoto Convention (RKC), the term ―consignment‖ is used to refer to a single shipment rather than to a
general standard customs procedure, except in the special case of the ―Relief consignments‖ procedure covered in
Specific Annex J (Chapter 5).
195 See IMTS 2010, para. 4.15 (f) for the valuation of returned goods.
245
and wheat and rice are frequently stockpiled at specific locations for the purpose of future
distribution and use. For example, some small island States store large amounts of fuels to ensure
that visiting ships and aircraft can be properly refuelled. While these supplies might be fully
under the control of a foreign entity, they nevertheless form part of the material resources of the
country.
19.8. Example involving goods simply being transported through a country. Large trading
places such as Rotterdam (for oil) and Dubai and China, Hong Kong SAR (for merchandise) are
frequently the destination of goods that are then forwarded to another destination. It can be
difficult to determine whether these goods are entering the country on consignment, for storage
or only as goods in transit.
19.9. Example involving goods temporarily admitted or dispatched. This category includes, but
is not limited to, goods identified in the revised Kyoto Convention (RKC) and the Istanbul
Convention196
as goods covered by the "temporary admission subject to re-exportation in the
same state" customs procedure. Such goods include display equipment for trade fairs and
exhibitions; art exhibits, commercial samples and pedagogic material; animals for breeding,
show or racing; packaging, means of transport, containers and equipment connected with
transport; and equipment for the working of lands adjacent to the border by persons resident
abroad. In cases where movements of goods are not covered by a specific customs procedure, the
statistical authorities should establish criteria for determining whether the movement of goods
should be considered temporary.
19.10. Example of goods for repair or maintenance. Ships and aircraft frequently undergo repair
and maintenance in other countries which is to be recorded as a service transaction. Regular
repair or maintenance might be difficult to distinguish from refitting or refurbishing, which
results into an essentially new product whose import and subsequent export need to be included
in IMTS (see also subsequent chaps. XX and XXIII).
C. Economic territory and categories of goods
19.11. The application of the concept of economic territory requires further explanation in the
case of trade in ships and aircraft, bunkers, stores and enclaves/exclaves.
19.12. Ships and aircraft. As mentioned in IMTS 2010 (para. 1.29), ships and aircraft, which are
goods that are mobile by definition, might never enter the economic territory of the reporting
country. However, they are nevertheless to be viewed as part of the material resources of a
country if the owner is a resident of that country. This can be seen as a convention that allows for
the recording of ships and aircraft that is most meaningful and, despite its difficulties, most
practical. The attribution of ships and aircraft to the material resources of a country could also be
based on the degree of physical presence and maintenance arrangements which, however, would
be less meaningful, given the importance of ownership and probably much less practical.
196
The Convention on Temporary Admission, signed in Istanbul on 26 June 1990, provided a means of bringing
together, and simplifying, various instruments governing temporary admission of goods.
246
19.13. Bunkers and stores. As indicated in IMTS 2010 (para. 1.32), the recording of bunkers and
stores does not present much difficulty, either conceptually or practically, if these transactions
take place within the own economy, e.g., in the case of refuelling of foreign aircraft and ship, as
the supplies are apparently leaving the economic territory on board of the foreign vessels and
ships. However, such transactions also need to be recorded as imports by the country where the
economic owner of the ship resides, despite the fact that these supplies most likely will never
cross the geographical-economic border of these countries. Conceptually, ships and aircrafts
need to be viewed as part of the economic territory of the country where the economic owner
resides. This should be obvious, as these ships and aircraft contribute to the value added/gross
domestic product (GDP) of the countries where the economic owner resides and hence all inports
required to generate this value added should be attributed to that country as well.
19.14. Enclaves. IMTS 2010 (para. 2.10) specifies that the economic territory also includes
territorial enclaves in the rest of the world. These are clearly demarcated land areas (such as
embassies, consulates, military bases, scientific stations, information or immigration offices, aid
agencies, central bank representative offices with diplomatic immunity, etc.) located in other
territories and used by Governments that own or rent them for diplomatic, military, scientific, or
other purposes with the formal agreement of Governments of the territories where the land areas
are physically located. Goods supplied by and to enclaves of foreign Governments are to be
excluded and treated under trade in services (see IMTS 2010, para. 1.49 (c)).
D. Cross-border trade and smuggling
19.15. Three cases to distinguish. Goods acquired by all categories of travellers, if significant as
defined by national law (often referred to as shuttle trade), are to be included (IMTS 2010, para.
1.16). This includes used goods such as cars (IMTS 2010, para. 1.37) or produce, and special
surveys and estimation methods might be required to compile information on this trade. If those
goods enter the economic territory illegally (e.g., through smuggling or as stolen vehicles), they
should be excluded but recorded separately (IMTS 2010, para. 1.59). Goods in amounts or values
that do not exceed limits established by national law are to be treated as part of trade in services
(IMTS 2010, para. 1.49 (a)).
19.16. Fictitious trade. While smuggling reduces the coverage of trade statistics, other
fraudulent activities can artificially inflate recorded trade. The case of the declaration of a trade
value too high for exports, e.g., to receive a subsidy, raises a valuation issue (see chap. XIV) and
a matter of statistical quality assurance (see chap. IX). However, in some cases (for instance, in
the so-called carousel fraud in the European Union), a series of trade transactions of significant
value is created to enable value added tax fraud to be committed without the goods necessarily
ever moving.197
It is good practice for compilersto stay in close contact with the responsible tax
and customs authorities in order to properly remove such fictitious trade transactions, once
identified, from the data.
197
European Commission, ―VAT fraud: frequently asked questions‖, press release (MEMO/01/230), Brussels, 19
June 2001.
247
E. Customs and statistical threshold; treatment of non-response
19.17. Customs and statistical threshold. The customs threshold can be defined as a threshold
specified in value or quantity under which customs does not require a goods declaration to be
completed. Such thresholds are applied by many countries for the goods acquired by travellers
(see IMTS 2010, para 1.49 (a)) and for goods sent by postal and courier services. Statistical
authorities might adopt the customs threshold as their statistical threshold for practical reasons. If
the trade that takes place under the statistical threshold is economically significant, as determined
by the statistical authorities of the compiling country, it should be estimated and included in the
trade statistics (see IMTS 2010, para. 1.3). Box XIX.1 provides information on the different
thresholds applied in the European Union Intrastat system and box XIX.2 describes a practice for
estimation of trade below threshold.
Box XIX.1
Thresholds applied in the European Union Intrastat system
Exemption threshold
The exemption threshold as defined in article 10 (3) of Regulation (EC) No. 638/2004 of the
European Parliament and of the Council of 31 March 2004, is a mandatory threshold, i.e., each
member State shall set the thresholds below which parties responsible for providing information
(PSIs) are exempted from providing any Intrastat information.
The value of the trade of a party responsible for providing information is considered to be above
the thresholds if:
(a) The value of trade with other member States during the previous year exceeded the applicable
thresholds; or
(b) The cumulative value of trade with other member States since the beginning of the year of
application has exceeded the applicable thresholds. In this case, information should be provided
from the month in which the thresholds were exceeded.
Simplification threshold
Application of the simplification threshold as defined in article 10 (4) of Regulation (EC) No
638/2004 is optional, i.e., member States may apply a simplification threshold. The member
State has the option of selecting the type of simplification that is implemented:a
(a) Exemption of traders from providing information about the quantity of the goods;
(b) Exemption of traders from providing information about the nature of transaction;
(c) Possibility of reporting a maximum of 10 of the relevant Combined Nomenclature (CN)
subheadings and regrouping other products according to partner Member State under code 9950
00 00.
Small transaction threshold
Application of the small transaction threshold, as defined in article 10 (6) of Regulation (EC) No
638/2004, is optional. Depending on the decision of individual member States, PSIs may group
together transactions with individual values less than the small transactions threshold. Article 13
(4) of Commission Regulation (EC) No. 1982/2004 of 18 November 2004 implementing
Regulation (EC) No. 638/2004 of the European Parliament and of the Council of Community
Statistics relating to the trading of goods between member States and repealing Commission
Regulations (EC) No. 3590/92, fixes the threshold at 200 EUR. Traders may report just the
248
partner member State and the value of goods using product code 9950 00 00. National authorities
may require an authorization for the application of this simplified reporting.
Statistical value threshold
The statistical value threshold as defined by article 13 (2) of Regulation (EC) No. 1982/2004 is
set as mandatory in those member States that collect the statistical value. The threshold is usually
applied to the collection of the optional data elements as well. a See Eurostat, ―National requirements for the Intrastat system: 2011 edition‖.
Box XIX.2
Estimation of trade below the threshold: experience of the European Union (Germany)
Exporters and importers are exempted from the declaration of intra-European Union trade if their
yearly exports/imports do not exceed a certain value. The estimation of the missing data follows
a ―top down-procedure‖. The total value of the trade below threshold can be estimated with the
help of the relevant tax data. The total value is then broken down by commodities (at the HS
two-digit level) and partner countries according to the structure of the enterprises just above the
threshold. The idea behind this is that the trade structure of the companies near the threshold
should be quite similar. The quantities are calculated proportional to the share of the estimated
values in the total values.
19.18. Treatment of non-response and simplified customs declaration. In general, non-response
refers to the situation when an entity responsible for providing information about trade
transactions does not respond to the request for the information. Non-responses are usually
associated with surveys, but can occur in respect to other sources as well. Simplified customs
declarations refer to certain transactions where only part of the usually required information is
requested by customs. In both cases—non-responses to enterprise surveys, and absence of the
necessary information due to the application of simplified customs declaration —countries are
encouraged to estimate and include such flows in their foreign merchandise trade statistics
following the IMTS 2010 recommendations if they are economically significant, as determined
by the statistical authority of the compiling country (see also para. 2.28 of this Manual).
However, in the case where goods should have been declared to customs but the traders failed to
do so and, in fact, the goods were moved in or out of the compiling country illegally, such
movement of goods would constitute smuggling and should be excluded from the international
merchandise trade statistics (see para. 19.15 above).
F. Confidential data and incomplete coverage due to data omission
19.19. Confidential data. Some countries consider certain commodity and partner information as
confidential owing to security concerns or other considerations. Examples include information
on imports of military or other sensitive goods and information on exports of oil and gas.
IMTS 2010 (para. 10.3) recommends that data considered confidential be included at the next-
higher level of commodity or partner detail that ensures the required confidentiality. Confidential
trade flows are within the scope of the international merchandise trade statistics and the
application of confidentiality should not result in under-coverage (see chaps. X and XXVI for
further details and good practices).
249
19.20. Omission of data. There are examples where information on trade transactions that are
not covered by regular customs recording is omitted from merchandise trade statistics, although
information is provided and included for balance-of-payments statistics. It might be the case that
the available information does not allow the inclusion in merchandise trade statistics at the
detailed commodity and partner data levels. However, in line with the general guideline on the
scope of IMTS, this trade should be included at the total level in order that full coverage may be
provided.
251
Chapter XX
Goods for processing
20.1. Introduction. The present chapter defines and provides examples of goods for processing
(sect. A), while also explaining why certain transactions and activities are excluded from this
category (sect. B). Information on the treatment of goods for processing in 2008 SNA/BPM6 is
provided in section C. Challenges in the identification of trade in goods for processing, including
goods for processing where no change of ownership takes place, are described in section D.
Section E provides examples of country experiences in the identification of goods for processing.
This chapter is linked in particular to chapter XXI, which covers trade between related parties,
and chapter XXIII, which discusses the recording of trade in ships and aircraft.
20.2. Importance of identifying goods for processing. The issue of goods for processing has
gained increased attention in recent years, as the production of goods is now frequently spread
out across multiple countries, in what are often described as global value chains. This is having
significant impact on employment and on the value added generated in the countries that
participate in the production process, and raises important issues about the long-term
competitiveness of specific sectors of national economies. Therefore, the separate identification
and provision of further information on goods for processing are of great analytical importance.
The urgent need to improve the availability and the quality of data on goods for processing is
also a consequence of the need to identify, for the purposes of national accounts and balance-of-
payments systems, goods for processing where no change of ownership of the goods takes place,
in view of the recent change in the statistical treatment of such goods in those systems. It is
expected that, over time, most countries will be able to provide more information on goods for
processing and to improve its quality. However, owing to the issues detailed below, that
information will often have limitations of which users should be made aware in the metadata.
A. Definition and examples of goods for processing
20.3. General definition of goods for processing. Goods for processing are goods that are sent
abroad or brought into a country under a specific arrangement between the involved parties
(which may or may not include the change of ownership) and for specific operations as defined
by the statistical authorities of the compiling country (see IMTS 2010, para. 1.19). In principle,
any good that is crossing borders and is intended for use in the production of a new or improved
product, or any good that is expected to undergo certain specific operations in another country,
might be treated as a good for processing (see sect. B for exclusions). However, customs and
statistical authorities in many countries adopt various versions of a more narrow definition of
goods for processing, which in most cases would allow for the identification of such goods. It is
good practice to adopt a clear and operational definition of goods for processing which can be
systematically applied, and to include that definition in the trade statistics metadata.
20.4. Specific definitions of goods for processing based on customs procedures. Many
countries have adopted definitions of goods for processing based on specific customs procedures,
such as ―inward processing‖, under which certain goods can be brought into a customs territory
conditionally relieved from payment of import duties and taxes, on the basis that such goods are
252
intended for manufacturing, processing or repair and subsequent exportation.198
To the extent
that it is beneficial for traders to use specific procedures that are reserved for goods for
processing, such goods are identified in a highly reliable manner by customs procedure codes.
Customs procedures such as ―inward processing‖ and ―outward processing‖ provide clear
definitions of goods for processing. However, depending on national regulations and practices,
―free zone‖ and ―drawback‖ procedures, for example, could also include goods for processing. In
general, specific customs procedures for goods for processing are put in place as part of the trade
and economic policies of a country and in direct support of certain economic activities.
20.5. Limitations of the use of customs procedures. Customs procedures might not provide
either sufficient information about, or a reliable definition of, goods for processing, as in many
cases, using such procedures could be perceived as non-beneficial by traders owing, e.g., to the
reduction or elimination of duties. It might be preferable for traders to clear goods for processing
for free circulation at import and as regular exports when they leave the country.199
In that case,
there may be no means of identifying imports for processing based on customs records.
Identifying exports for processing or re-exports of processed goods may be even more difficult.
Also, for trade within a customs union, there might be no customs declarations and procedures
that could identify goods for processing.
20.6. Other definitions of goods for processing. In the absence of relevant custom procedures,
goods for processing are defined based on economic or other criteria which might reflect specific
information requirements (see the example provided in box XX.1 below).
Box XX.1
Definition and identification of goods for processing in the European Union
European Commission Regulation No. 1982/2004 defines processing as operations
(transformation, construction, assembling, enhancement, renovation…) with the objective of
producing a new or really improved item (annex III, footnote e). It is specified that this does not
necessarily involve a change in the product classification. However, the statistical recording of
goods for processing through a so-called nature-of-transactions code in the extra- and intra-EU
trade system of the European Union is limited to processing under contract without transfer of
ownership to the processor.a This means that processing activities on a processor‘s own account
are not covered.b
A proper distinction of processing without change of ownership is important for
BOP and national account purposes. For this purpose it is useful to limit the definition for goods
for processing to processing under contract. a See annex XVIII.B for the list of nature of transaction codes for Extrastat.
b Commission Regulation (EU) No. 113/2010 of 9 February 2010, annex II, footnote 2; Commission Regulation
(EC) No. 1982/2004 of 18 November 2004, annex III, footnote 2; and Commission Regulation (EU) No. 96/2010 of
4 February 2010 amending Regulation (EC) No. 1982/2004, annex III, footnote 2.
198
See revised Kyoto Convention (RKC), Specific Annex F, Chapter 1, definition E3./F2. See also chaps. II and
XVIII of this Manual.
199 Also, according to most-favored-nation agreements, goods can be exempted from import duties and may be
admitted through the customs procedure for goods declared for home use (free circulation); hence, the customs
procedure used would not necessarily be an indication of a processing activity.
253
20.7. Description of processing under contract. Processing under contract means that no
change of ownership takes place. The ordering party provides the primary or intermediate
product to the subcontractor responsible for the processing and stays the owner of these products.
The subcontractor sends the processed good after processing back to the ordering party or out to
another trader to whom the ordering party has sold the processed good.
20.8. Operations considered processing. The following operations are frequently considered
to be processing but countries might treat some other operations as processing as well:200
Manufacturing/assembly of goods (e.g., semiconductors)
Oil refining, gold refining, etc.
Conservation (e.g., by the addition of preservatives)
Treatment (e.g., against parasites or rust)
Mixing goods of different qualities to produce goods of a new quality
Labelling of goods, providing the labels are part of a sale transaction; if not, labelling
is a service
Bottling of liquid (e.g., wine from barrels)
Canning of goods (e.g., tinned food)
Making up of textiles into products (e.g., clothing, handbags, curtains)
Dilution or concentration of liquids (e.g., orange juice)
Uranium enrichment
B. Transactions and activities that are not goods for processing
20.9. Goods for repair and service operations. Processing should be clearly delimited from
simple service operations or repair. A repair is defined as ―the restoration of goods to their
original function: this may involve some rebuilding or enhancements‖. The following examples
may facilitate the identification and delimitation of repair and service operations:201
(a) Repairs:
Simple replacement of part of an item indicates that a repair transaction might have
been carried out; on the other hand, if it results in an really improved item, repair is a
process
Repair of damage to goods incurred during transport
Repainting should be treated as repair/maintenance; however, the painting of
unpainted goods should be treated as processing
(b) Services:
For aircraft,202
technical maintenance activities that are carried out owing to legal
requirements (e.g., controls, mandatory periodic replacements)
200
This list should not be considered prescriptive or complete; rather, it is a reference list of activities that could be
regarded as constituting processing, depending on a country‘s circumstances.
201 In the past, this list of examples has been in use within the European Union. While it might require further review
and elaboration, it appears to be largely acceptable to most countries.
202 For further details on the recording of aircraft (and ships), see chap. XXIII.
254
Testing, adjusting, regulating or certification of goods (e.g., aircraft, machines,
apparatus, vehicles)
Simple ironing, washing, cleaning, drying operations
Simple packaging operations
Simple sorting, sifting, weighing, dividing and filtering of goods
20.10. Difficulties. In practice, many borderline cases might exist where repairs and service
operations can be difficult to differentiate from processing. Such borderline cases encompass, for
example, a repair in which, as replacement, part of a new model with better performance is used,
and the partial refitting of a ship or aircraft during repair. Cases that involve high-value goods
such as ships and aircraft can have a significant impact on the value of imports and exports and
should therefore be reviewed on an individual basis. The users should be informed appropriately
about their recording.
C. Treatment of goods for processing in the 2008 SNA/ BPM6
20.11. Goods for processing without change of ownership. IMTS 2010 (paras. 1.19-1.20)
recommends that goods for processing be recorded when they enter or leave the economic
territory, irrespective of whether a change in ownership takes place. However, the recording of
transactions in the balance of payments is based on the principle of change of ownership between
residents and non-residents: Goods supplied to another economy for processing without a change
of ownership and returned to the economy of the owner after processing are not recorded as a
goods transactions in the balance-of-payments statistics compiled according to BPM6. Instead,
the BPM6 (see paras. 10.22 (f) and 10.62-10.71) records a manufacturing service on physical
inputs owned by others to reflect the relationship between the owner and processor and only the
fee charged by the processor is included under this item. The fifth edition of the Balance of
Payments Manual,203
inputed a change of ownership in the case of goods for processing, but
BPM6 reversed this practice, thereby establishing a major conceptual difference from
merchandise trade statistics.
20.12. Recording of the sale of goods to a third country after processing in BPM6. If the goods
are sold to a third economy after processing, then the value of the goods (including the value of
processing) is recorded as an export of the economy of the owner and an import of the third
economy; the value of the processing is recorded as an export of services of the processing
economy and an import of services of the economy of the owner (see BPM6, paras. 10.22 (f) and
10.62-10.71).
20.13. Definition of goods for processing in BPM6. Manufacturing services on physical inputs
owned by others cover, inter alia, processing, assembly, labelling and packing undertaken by
enterprises that do not own the goods concerned. The manufacturing is undertaken by an entity
that does not own the goods and that is paid a fee by the owner. In these cases, as the ownership
of the goods does not change, no general merchandise transaction is recorded between the
processor and the owner. Examples of processes that are often undertaken under arrangements
for manufacturing services on physical inputs owned by others include oil refining, liquefaction
203
Washington, D.C., International Monetary Fund, 1993.
255
of natural gas, assembly of clothing and electronics, assembly (excluding assembly of
prefabricated constructions, which are included in construction), labelling and packing
(excluding cases of packing incidental to transport, which is included in transport services) (see
BPM6, paras. 10.62-10.63).
D. Identifying trade in goods for processing, with or without change of ownership, and the
implications for the balance-of-payments compilation
20.14. Recommendation to identify trade in goods for processing. IMTS 2010 (para. 1.20),
recommends that goods for processing and goods resulting from such processing (―compensating
products‖ in customs terminology), are to be included in the merchandise exports and imports of
countries at their full (gross) value. It encourages countries to explicitly identify in their trade
statistics (preferably by special coding) goods for processing and goods resulting from such
processing where no change of ownership takes place (para. 1.21). Further, IMTS 2010 (paras.
2.19 and 8.6) recommends that information about the customs procedure applied to individual
transactions (or the nature of transaction) be included in the data set for trade statistics in order to
facilitate the identification of re-exports and reimports but also of other types of trade, such as
goods for processing, trade between related parties, goods on consignment, etc., as far as
possible.
20.15. Identifying goods for processing. Customs procedures can provide a very reliable means
of identifying goods for processing. However, if countries do not have customs procedures that
are specific for goods for processing or if traders do not use those procedures, as it might be
more convenient not to use them, the information on goods for processing from customs
recording might be incomplete and inaccurate (see also para. 20.4). Distinguishing goods for
processing from goods for repair and service operations can present a further difficulty. Also,
customs records would usually not indicate whether there is a change of ownership and whether
the transaction takes place between related parties. Therefore, compilers are encouraged to use
additional means, such as special surveys or studies or linking custom records with information
about the traders, to overcome these difficulties to the extent possible.
20.16. Avoiding double-counting in the balance of payments. International merchandise trade
statistics are the main source of data on trade in goods for the balance of payments and national
accounts. In order to obtain the value of total goods on a balance-of-payment basis from
merchandise trade statistics, BOP compilers have to undertake several adjustments, among
which the following three concern goods for processing:
(a) Subtracting goods sent for or returned after processing without a change of ownership
(b) Adding goods acquired from other economies than the own for processing abroad as
imports (BPM6, para. 10.65) (i.e., additional materials used in the processing of the goods);
(c) Adding goods sold abroad after processing in other economies as exports (BPM6, para.
10.66).
Only in case (a) are the transactions within the scope of international merchandise trade
statistics, and they would usually be included in the customs recording. Goods under (b) and (c)
never cross the border of the reporting country. Compilers of balance of payments and national
256
accounts would require additional to capture the required information regarding the transactions
indicated in (b) and (c).204
20.17. Implications for users. The figures for imports and exports of ―Total goods‖ in the BPM6
Goods and Services Account are expected, at least for some countries, to be significantly
different from the figures for total imports and exports published in trade statistics, probably
often reflecting the role of goods for processing without change of ownership but other
differences as well. Similar differences are expected for the sub-item ―Re-exports‖. Further, the
joint presentation of detailed data on trade in goods and trade in services will require
explanations of why the detailed data do not add up to a total figure for trade. The agencies
responsible for the dissemination on trade in goods on an IMTS and balance of payment/national
accounts basis should agree on a uniform dissemination strategy which would entail uniform
labeling and the provision of a reconciliation table.
E. Country experiences
20.18. Goods for processing: example from China. Processing trade accounts for a large share of
Chinese exports and imports (about 50 per cent of exports and 30 per cent of imports).205
The
General Administration of Customs of the People‘s Republic of China, which is the responsible
agency for merchandise trade statistics, defines goods for processing based on the customs
procedure of inward processing, under which certain goods can be brought into China‘s customs
territory for manufacturing or processing with subsequent exportation. Two types of customs
regimes are differentiated: type I, whereby the imported input remains the property of the
supplier and type II, whereby the ownership of imported inputs is transferred to producers of
China. The placement of goods under the inward processing procedure requires authorization
and customs monitors the processing operation. The external trade statistics reflect collection of
information at the enterprise transaction level.
20.19. Goods for processing: example from China, Hong Kong SAR. An example regarding the
compilation of information on the outward processing of China, Hong Kong SAR, in the
mainland of China in provided in paragraph 4.19.
20.20. Goods for processing: example from Iceland.206
The metal industry, which is a major
industry in Iceland, imports raw material to be processed and exports goods after processing.
Few companies are involved, and importers are obligated to indicate on the customs declaration
whether the good imported is for processing. Raw material imported for manufacture is
exempted from excise tax and duties (according to customs regulations). This provides an
204
For an example, see Chan Ka-lin, ―Development of trade in goods and services statistics in Hong Kong‖ (Census
and Statistics Department, China, Hong Kong Special Administrative Region), presentation at the Global Forum on
Trade Statistics, Geneva, 2-4 February 2011.
205 See Hongman Jin, ―China‘s Practice in Statistics of Goods for Processing‖ (Statistics Department, General
Administration of Customs of China), presentation at the Global Forum on Trade Statistics, Geneva, 2-4 February
2011.
206 See A. Ó. Svavarsdóttir, ―New manuals of trade in goods and trade in services: Goods for processing in Iceland‖
(Statistics Iceland), presentation at the Global Forum on Trade Statistics, Geneva, 2-4 February 2011.
257
incentive for enterprises to identify goods for processing on the import declaration. Some
enterprises buy the raw material from abroad and sell the finished product to abroad (change of
ownership); others make agreements with foreign enterprises to process raw material into
finished products; the foreign enterprises provide the raw material and sell the good after
processing (no change of ownership). There is a high prevalence of goods for processing in
Iceland‘s trade data for goods and services.
20.21. Goods for processing: example from the Philippines. The National Statistical Office of
the Philippines has not yet included the customs procedure code in the processing of the trade
data. Therefore, so-called consigned goods are considered to be goods for processing.
Semiconductors and garments are examples of consigned goods. Consigned goods are
determined based on the following steps:
(a) Confirm that ―FOB value of imported raw materials‖ in box 40 of the export document
has an entry. This item must always have an entry if the goods exported are consigned goods.
FOB value of consigned goods equals labour cost plus FOB value of imported raw material;
(b) Validate the value declared in box 40 with the attached invoice, and look for the value of
consigned raw materials, consigned items, consigned inputs or processed items, or the value of
imported materials or processing cost. The value should coincide with the value declared in box
40;
(c) Ascertain whether the CMT or CMP value written in the export document. FOB value of
consigned goods equals CMT/CMP (labour cost) plus FOB value of imported raw material.
Some export documents do not have an entry for box 40. In this case, the attached invoice and
notes written in the document serve as the basis for categorizing consigned goods. The list of
exporters of consignment goods is also used. Goods exported from an exporter on this list are
categorized as consigned goods. However, the list is updated only when the exporter changes its
line of commodity.
20.22. Example from Morocco: compilation of transactions accomplished as part of temporary
importation for active refinement with and without payments. The information on transactions
performed under the regime of temporary admission for active refinement is obtained from the
customs declarations (the single declaration of goods (DUM)) filled out by merchants engaged in
any operation of importation or exportation of the goods. The merchant is required to indicate on
the single declaration of goods the customs regime under which the goods will be accepted into
the national economic territory. One can differentiate between two types of regimes of active
refinement:
(a) Active refinement without payment: this regime allows the acceptance on the customs
territory (with a hold on import taxes and duties) of certain goods intended to be re-exported in a
given time frame after having been subjected to a transformation; goods imported under this
regime are not subject to a financial transfer to the foreign purveyor, who remains the owner;
(b) Active refinement with payment: goods imported under this regime are subject to a
financial transfer to the foreign purveyor; the importer becomes the owner.
20.23. Foreign trade statistics include transactions on goods performed as part of the temporary
importation for active refinement whether there is a transfer of ownership or not (active
refinement with or without payment). Concerning active refinement with payment, the value of
imported raw materials and that of re-exported goods after transformation are reported on the
258
single declaration of goods. As for active refinement without payment, in addition to the single
declaration of goods, which contains only the value of the transformation, there is an audit file
containing the value of the imported raw material, which is received by the Office of Exchange.
The staff of the Office of Exchange undertakes the determination of the raw value for every re-
exportation. The value of re-exportation consists of the value of the raw material that has been
subjected to the transformation and the value added incorporated in the final product.
F. Additional issues
20.24. Valuation. In merchandise trade statistics, goods for processing before and after
processing are recorded at their gross value or full transaction value according to the general
valuation principle for IMTS (see IMTS 2010, para. 4.15 (e)). This valuation of goods before and
after processing may significantly influence the statistical results for certain categories of goods
as the value of some goods with high values (e.g., aircraft) before processing may be several
times higher than the value after processing. Users should be informed in the metadata how
certain transactions of high value are recorded.
259
Chapter XXI
Goods that cross borders as a result of transactions between related parties
21.1. Introduction. The present chapter elaborates the concept of trade transactions between
related parties as set out in paragraph 1.22 of IMTS 2010, and discusses the importance of
identifying these transactions. The means of identifying trade between related parties are
discussed and a country example is provided. This chapter is related to the chapter XX on goods
for processing, as goods are frequently sent to another country for processing at affiliates or
branches belonging to the same enterprise.
21.2. Recommendation on separately identifying trade between related parties. As trade
between related parties is an important dimension of international trade, there is a need to obtain
more information on this kind of trade. While trade between related parties has always been
included within the scope of IMTS, and in this sense is not different from trade between
unrelated parties, IMTS 2010 encourages countries to separately identify (code) such
transactions and the types of the relationships in order to be able to review their valuation and to
provide more detailed information on this transactions to users. It is acknowledged, however,
that depending on their specific data needs and overall compilation strategies, rather than identify
such goods in their regular trade data compilations, countries may find it more appropriate to
estimate their share in imports and exports by conducting periodic surveys of companies that
have foreign affiliates or are affiliates of the foreign companies.207
Countries should describe
their practices in this respect in their metadata to ensure proper use of their statistics and to assist
in international comparisons.
A. Definition of “related parties” and examples of trade between related parties
21.3. Definition of “related parties”. IMTS 2010 (para. 1.22) encourages countries to use the
definition of related parties as given in article 15 (4) of the WTO Agreement on Customs
Valuation (see box XXI.1), which provides provisions for the appropriate valuation of goods
traded between related parties as the prices paid between related parties might be influenced by
their relationship.208
Countries might diverge from this recommendation and use another
definition of related parties such as the OECD benchmark definition for foreign investment
(BD4).209
Countries should state in their metadata which definition is used.
207
Some countries view it as more appropriate to estimate the share of intra-firm trade by surveys conducted every
two or three years than to collect that information in the frame of regular foreign trade statistics, in particular as this
information may not be needed on a monthly basis.
208 Long-term studies of inter-company pricing have shown that the relationship between parties can have an impact
on the valuation of transactions. However, it might be more useful to have information on whether the trade is
valued according to some transfer pricing agreement. As transfer pricing does not always follow the OECD
guidelines, countries might have transfer pricing policies outside those guidelines.
209 See Organization for Economic Cooperation and Development: OECD Benchmark Definition of Foreign Direct
Investment: Fourth Eidition 2008 (Paris, 2008). ―Related parties‖ can also be defined according to the BPM6 (para.
6.12) and OECD benchmark definitions for foreign direct investment (BD4, paras. 11 and 31) as parent corporations
and their direct investment enterprise (affiliates/branches). A direct investment enterprise is an incorporated or
unincorporated enterprise in which a direct investor who is resident in another economy owns 10 per cent or more of
the voting power (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). The WTO
definition of related parties is in general seen as the most operational definition from the customs perspective.
260
Box XXI.1.
WTO definition of “related parties”
Article 15 (4) of the WTO Agreement on Customs Valuation
For the purposes of this Agreement, persons shall be deemed to be related only if:
(a) they are officers or directors of one another's businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 5 per cent or more of the
outstanding voting stock or shares of both of them;
(e) one of them directly or indirectly controls the other;
(f) both of them are directly or indirectly controlled by a third person;
(g) together they directly or indirectly control a third person; or
(h) they are members of the same family.
21.4. Examples of trade between related parties. The most basic example of trade between
related parties is trade between the parent corporation and its direct investment enterprise in
another country. Such trade is frequently motivated by favourable production conditions in that
country (e.g., lower costs of inputs or a favourable tax regime) or related to market access or to
the distribution of the goods. However, trade between related parties is frequently part of much
more complex global production and distribution processes which stretch over many countries. A
special case is that of trade of goods for processing (see chap. XX), whereby goods are brought
into a country for specific operations under a specific arrangement between the involved parties
(they may or may not be related), and which may or may not include the change of ownership of
the goods.
B. Purposes of identifying trade between related parties (including valuation)
21.5. Valuation quality control. Customs has a legal obligation to ensure the valuation of
imports, which are subject to ad valorem duties, according to the WTO Agreement on Customs
Valuation. However, while not covered by this agreement, in general customs still aims to ensure
the correct valuation of all imports and exports. The responsible statistical agency either accepts
the customs valuation or makes necessary adjustments to determine the appropriate statistical
value of imports and exports using additional sources or estimation (see chap. XIV). The value
of goods declared by related parties can be influenced by their relationship, as shown by long-
term studies of inter-company prices. Therefore, information on whether any given transaction
takes place between related parties or not would facilitate significantly the monitoring and
assessment of valuation practices and provide the basis for making any adjustments to the
declared values, as deemed appropriate by the responsible statistical authority.
21.6. Understanding multinational enterprises and the causes of trade. The activities of
multinational enterprises are widely seen as a key factor in the global economy. These
enterprises account for a large share of value added, employment and exports and imports in
many countries and for a large share of global trade. They are considered responsible for the
development of global value chains and the spreading out of production processes over many
countries, thereby accounting for a large part of the increase of global trade. In the past, trade
261
statisticians had no detailed information on the trade carried out by multinational enterprises. The
development of trade by enterprise characteristics (TEC), which is achieved by linking trade data
with information from the business register (see chap. XI), provides insights into the trade of
large enterprises. However, the systematic identification of intra-firm trade would allow a much
more comprehensive and more detailed analysis of global trade and the activities of
multinational enterprises, including their impact on national growth and employment.
21.7. Level of detail needed. As described below, there are different options for obtaining
information on the trade between related parties. These options might provide information on the
trade between related parties at the total level only or at the transaction level. For valuation
purposes, information on transaction level is required. However, it might be sufficient to limit
the request for this information to large transactions. For the analysis of the activities of
multinational enterprises, aggregate figures such as the ones suggested as part of foreign
affiliates statistics (FATS) might be sufficient. However, only detailed commodity-based data
concerning trade between related parties will allow a detailed understanding of this trade.
C. Means of obtaining information on trade between related parties
21.8. The customs declaration and accompanying documentation. Information on whether a
trade transaction takes place between related parties is usually not available on the customs
declaration (see Table VIII.2). Further, the examination of accompanying information might not
provide sufficient indications of trade between related parties. However, countries can require
traders to provide such information on the declaration (see the example from the United States
provided in para. 21.13 below). In this case, the information technology systems (such as
ASYCUDA, NIPASS, SISCOMEX, TRIM, etc.) used in different customs administrations
worldwide would have to be adapted to allow regular compilation of this information. At this
time, concerns in most countries about the response burden, the feasibility of obtaining reliable
information, etc., appear to outweigh arguments emphasizing the need for this information. A
common concern in respect of obtaining this information is that the traders or brokers that
complete the transactions might not know the nature of the relationship between the parties for
which the trade takes place, and that even the trading enterprises might not be aware of their
relationship, in particular if there are frequent changes in the ownership structure. Further,
statistical offices and customs may believe that the reasons advanced for obtaining this
information at a detailed level are not sufficiently strong or not view this as a priority.
21.9. Supplementary enterprise surveys and studies. In many countries, the trade transactions
in a specific economic sector are concentrated among a few large multinational enterprises.
Given their effect on domestic value added and employment, these enterprises should be well
covered in the existing business statistics and identified by statistics compilers. These enterprises
could be the subject of special surveys, and could be requested to provide information on their
trade with their foreign affiliates or parent enterprise(s), at either the aggregate or the detailed
level of the customs declaration. Such information could be collected on a regular basis (surveys)
or for adhoc purposes (specific studies).
21.10. Foreign affiliates statistic (FATS). Figures on total and intra-group exports and imports
of goods and services by foreign affiliates are currently produced by a limited number of
262
countries. However, more countries are expected to begin the compilation of such data following
the recommendations on FATS adopted by the United Nations Statistical Commission and
published in Manual on Statistics of International Trade in Services 2010 (MSITS 2010, chapt.
IV).210
For example, EU member States plan to improve their FATS in the near future under the
EU-level FATS Regulation.211
Regarding the identification of trade between related parties, it
would be good practice to disaggregate exports and imports into a few broad categories where
trade with related enterprises could be distinguished from trade with unrelated parties (MSITS
2010, para. 4.60), as such data would be highly useful in the analysis of globalization issues.
However, FATS do not include statistics on the parent enterprise, and it appears to be difficult to
obtain detailed information on total and intra-group trade at the product level. The practice of
Italy, developed under the framework of the FATS EU Regulation, shows that some interesting
figures on total trade by foreign affiliates at the product level can be obtained by merging, at the
company level, the list of foreign affiliates with the list of foreign trade operators.
21.11. Linking customs declarations with transnational enterprise registers. Although currently,
this is mostly a theoretical possibility, linking customs declarations with a transnational
enterprise register may become feasible in the future. If countries adopted the model of a
seamless integrated data pipeline, it would allow the linkage of export declarations with their
corresponding import declarations (see para. 8.8). Further, if the declarations were linked to a
transnational business register, it would be possible to identify the exporting and importing
enterprise of a trade transaction. The transnational business register would contain the
information about the relationships of its entities and thereby allow the identification of intra-
firm trade. However, countries will first need to agree and establish a functioning transnational
enterprise register, such as the European Union EuroGroups Register.212
21.12. Conclusions. The objectives of identifying trade between related parties are in general
supported by countries.213
However, there are significant challenges in respect of compilation,
which would make obtaining this information in the near term a difficult or unrealistic
undertaking for many countries. Requesting an indication of intra-firm trade on the customs
declaration, if possible, can be considered best practice (see the example from the United States
below). Overall, the implementation of this encouragement to identify intra-firm trade might
depend on national needs and priorities.
D. Good practices
21.13. Experience of the United States of America: Definition of “related parties”. Related
party, or intra-firm trade, refers to shipments between United States companies and their foreign
subsidiaries as well as trade between United States subsidiaries of foreign companies and their
210
United Nations publication, Sales No. E.10.XVII.14.
211 Regulation (EC) No. 716/2007 of the European Parliament and of the Council of 10 June 2007 on Community
statistics on the structure and activity of foreign affiliates.
212 Addigional information is available from http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/
special_sbs_topics/eurogroups_register.
213 See United Nations Statistics Division, ―Report on the results of the first round of worldwide consultation‖,
October 2008, p. 9. Available from http://unstats.un.org/unsd/trade/imts/sc/trade_09.htm.
263
affiliates abroad. For export transactions, firms are ―related‖ if either party owns, directly or
indirectly, 10 per cent or more of the other party (see Section 30.6 (10) of the Foreign Trade
Regulations). This definition of related party corresponds exactly to that used by the Bureau of
Economic Analysis in its annual surveys of multinational activity. For imports, firms are
―related‖ if either owns, controls or holds voting power equivalent to 6 per cent of the
outstanding voting stock or shares of the other organization (see Section 402 (e) of the Tariff Act
of 1930).
21.14. Compilation and publication of data by the United States Census Bureau. Related party
data are compiled of administrative records from official United States import and export
merchandise trade statistics. Related-party shipments are identified by the indicators ―R‖, for
related, and ―N‖, for non-related, which are required for all export transactions and most import
transactions. Selling prices are used as a basis for determining the value of shipments; but in
general, it is required that the goods sold between related parties be valued as if the transactions
were carried out between unrelated parties.214
214
The Foreign Trade Division (FTD) of the United States Census Bureau releases aggregated related party data
through an annually published press release, available from http://www.census.gov/foreign-trade/Press-
Release/related_party/index.html. Additional related party data, which are not published in the annual press release,
can be obtained from the FTD Related Party Database (http://sasweb.ssd.census.gov/relatedparty).
265
Chapter XXII
Pipeline trade and trade through fixed power lines
22.1. Introduction. The present chapter discusses the characteristics of transactions in which
goods are delivered continuously across borders through pipelines (oil, gas and water) or through
fixed power lines (electricity).215
The same goods delivered across borders by other means (e.g.,
oil in barrels, liquefied gas in special containers, bottled water or electricity stored in various
power cells, etc.) are not covered in this chapter. Nevertheless, some issues raised in this chapter
concern such goods even if they are not delivered by pipeline. The chapter discusses the
challenges and good practices involved in measuring these transactions. It is linked to chaps. III
and IV on the use of non-customs sources, as well as chapter VII, which discusses the integration
of data from different sources.
22.2. Importance. International transactions in gas, oil and water which are delivered by
pipelines and electricity which is delivered by fixed power lines are not always recorded by the
customs authorities of some countries. However, these transactions constitute an important part
of international trade in goods and should be properly recorded following all applicable
recommendations contained in IMTS 2010. Countries are encouraged to establish appropriate
procedures to ensure that records of this trade are as accurate as possible. It is also important that
trading partners in such transactions record these flows using the same methods so as to improve
international comparability (see IMTS 2010, para. 1.24).
A. Characteristics of trade in electricity, gas, oil and water
22.3. Reasons for the potential lack of recording by customs. International trade transactions in
electricity, gas, oil and water are not always recorded by the customs authorities of some
countries, which may relate to the fact that these goods do not pass through the regular entry and
exit points within the purview of customs. Another reason might be that in many countries, the
trade in gas and oil takes place through government authorities or special entities that are not
obliged to submit customs declarations. Also, goods transmitted by fixed lines neither allow nor
require the same physical custom inspections that are or can be performed on all other goods.
22.4. Variety of international distribution arrangements. There can be very different
commercial or non-commercial distribution arrangements for goods delivered by pipeline or by
fixed lines (electricity) in various countries. On the one hand, the transmission of the goods can
be governed by a single contract between one producer or consortium of producers and one
company or consortium of companies which are responsible for the further distribution in the
importing country, with the pipeline/fixed line being owned by the parties of the contract. On the
other hand, if trade of electricity, gas or oil is fully liberalized in and between countries,
individual producers can deliver to individual consumers across a pipeline or fixed line that is
215
The present chapter focuses exclusively on the transactions in goods and does not discuss, in any manner, the
recording of the services that are entailed by or associated with the delivery of the goods. However, the value of
certain services is included in the valuation of goods according to FOB and CIF (see chapt. XIV, on valuation, for
further information).
266
not owned by any party of the contract. Obviously, data compilation will be affected by these
different arrangements.
22.5. Quantity and transaction value. A continuous transmission of these goods has the
consequence that the physical border crossing of a specific quantity is not necessarily connected
to a specific transaction, as is the case for other goods. Hence, the association of quantities with
specific transactions is known only by the trading partners and specified in the contract or
invoice while the actual delivered quantities are known only from the actual readings of the
transmission meters.
22.6. Recommendation on valuation. Electricity, gas, oil and water are to be valued net of any
delivery charges not included according to FOB- or CIF-type valuation. Such charges may or
may not appear separately on the invoice. In the absence of adequate customs records, it is
recommended that countries obtain the transaction value of these goods directly from the buyers
and sellers. However, if only the overall value including delivery charges is available, such
charges should be identified (e.g., using other sources of information and estimation) and
subtracted in order to obtain the statistical value of these goods. Delivery charges should be
valued at market prices, but it is acknowledged that markets for such services often do not exist
and prices for such services are either set administratively or based on some cost calculation. It is
recommended that trading partners in such transactions should value and record these flows in a
uniform manner so as to improve international comparability (IMTS, para. 4.15 (c)).
22.7. Complexity of pipeline and electricity networks and frequent buying and selling
transactions. A special characteristic of goods delivered by pipelines or fixed power lines,
particularly gas and electricity, is that many countries might be connected to the same
distribution system, which can make it difficult to determine the partner country and to identify
transit trade. Also, the complexity of the pipeline and power network system itself can make it
difficult to keep track of the physical flows. Another special characteristic of trade in electricity,
gas and oil is that those goods are often bought and sold without any physical movement of the
good taking place (merchanting). The purely financial transactions can be very difficult or
impossible to distinguish from trade transactions which affect the stock of material resources of
the involved countries.
B. Data sources and compilation issues
22.8. The use of customs declarations as main data source. In some countries, the information
available from the customs declarations provides accurate information on the pipeline trade in
gas, oil and water, and/or on the fixed-line trade in electricity. In this case, additional data
sources are used only to confirm and supplement, if necessary, the customs data. However, as
indicated in paragraph 22.3 in many countries there are no customs records at all or if they do
exist, they are not adequate. .
22.9. Information on prices. Customs declarations might not always reflect correctly actual
physical movements of oil, gas, water or electricity (e.g., the time of border crossing or the
quantities delivered might be different than indicated) but usually they do contain information on
the prices on the basis of which these goods can be valued. Commodity exchanges are another
267
source of information relevant to the valuation of such goods. However, the prices on these
exchanges relate more often to those quantities that are traded at the stock exchanges to cover
additional expected needs and therefore might apply to some future transactions rather than serve
as an indication of the actual price agreed between the buyer and seller in respect of the goods
that actually crossed borders in any given reference period.
22.10. Information on quantities provided by grid operators as an additional source. Grid
operators, who are responsible for the electric lines and the pipelines through which the goods
are transported, have information on the quantities of electricity, oil and gas that are crossing the
border between the country and a neighboring country. Grid operators are not often parties to the
trade transactions and can therefore be viewed only as a supplementary data source.
Nevertheless, in some countries the grid operators might be the only data source regarding the
physical movement of the goods (in terms of ―when‖ and ―where‖) of which the traders in these
goods might have lost track.
22.11. Combining information from customs declarations and other sources. A possible
approach to the compilation of data on trade through pipelines and fixed power lines is to derive
the statistical value from the price information available in customs declarations and/or other
sources and to decide whether or not the customs declarations sufficiently reflect the physical
movement across the border. Comparing the information from the grid operators with the
customs declarations can guide this decision. For example, if the quantity information given in
the customs declarations deviates significantly from the quantity information reported by the grid
operators, the physical movement should be measured on the basis of the information available
from grid operators, provided that the necessary verification, in particular regarding the
compliance of that information with the IMTS definition of scope and accuracy of
measurements, is systematically performed.
22.12. Trade transactions and merchanting. Compilation of trade statistics reflecting any buying
and selling of these goods would give a distorted picture of trade, as they often change
ownership (are bought and sold) many times without being physically moved across borders.
Normally, it is not possible for compilers of trade statistics to ascertain if and when the goods
actually crossed the border physically. Therefore, the information on physical border-crossing
derived from the grid operators, if available, is usually preferable to information regarding
purchases and sales.
22.13. Specific compilation issues. Two frequently mentioned compilation issues are the
identification of transit trade and the determination of partner country.
C. Country experiences
22.14. Trade in goods delivered continuously through pipelines: experience of China. It is
required that goods delivered continuously through pipelines or fixed power lines across borders,
such as electricity, water, gas and oil, be declared monthly, as normal goods, to customs by the
companies who sign the contracts for the import or export of those goods. The volume and value
of the previous month are to be accumulated if the other statistical items, such as partner country
and customs regime, are the same. The customs officer should verify the declaration form, and
268
may check the value by reviewing the contract. Normally, the price is a fixed one, and customs
officers may look at the meter measurement to check the quantity (in the case where pipeline
trade inspection agreements exist). Statisticians collect the data for statistical purposes after the
customs procedures are completed. For example, if a Chinese company is exporting electricity to
China, Hong Kong SAR, the company is required to declare the accumulated quantity and value
to customs by month and within 10 days. If a company exports electricity to China, Hong Kong
SAR, and China, Macau SAR, the company is required to complete two separate declaration
forms, one for each of these trading partners.
22.15. Trade in gas and electricity: experience of the United States of America. The United
States has encountered difficulties in obtaining accurate import information on pipeline
shipments of natural gas. Meter readings of pipeline operators are not sufficiently reliable for
statistical purposes owing to factors such as the location of meters and inconsistencies in how
meters are read by the pipeline operators. Through an agreement with Statistics Canada, the
United States Census Bureau receives Canada‘s data on exports of natural gas to the United
States and includes them as data on imports from Canada. Statistics Canada uses administrative
data for monthly estimates owing to timing problems and revises the data when actual totals
become available. Similarly for trade in electricity, the United States receives data on exports
and imports from its trading partner Canada.
22.16. Scope and compilation: experience of Germany. Energy, electricity, gas and oil, as well
as water, are often regarded as specific goods in trade statistics owing to their particular mode of
transport (i.e., through electric lines or pipelines), how they are traded and their fiscal treatment.
In the European Union, only electricity and gas that are transported through electric lines or
pipelines are considered specific goods. Gas that is not transported through pipelines, whether it
is in the gaseous or in the liquid state, is treated like all other goods. The specific rules for
electricity and gas transported through pipelines are based on their highly specific physical
characteristics. In Germany, information on trading of electricity is collected from the limited
number of grid operators, which have proved to be the most reliable data source by far for
measuring the quantities crossing the border. However, grid operators do not have any
information on prices. Therefore, average values for each partner country is calculated using the
declarations of the traders. Moreover, those values are cross-checked with the mirror figures of
the partner countries.
22.17. Production of external trade statistics on natural gas and electricity: experience of Italy.
A new approach to the compilation of external trade statistics on electricity and natural gas in the
gaseous state was developed by ISTAT of Italy and implemented for the first time in connection
with the final revision of data for 2010 and the first intermediate revision of data for January-
August 2011. This was motivated by the increasing prevalence of data-quality problems in 2011
as well as by the need to guarantee consistent time series with a limited structural break (see
annex XXII.A for further details).
269
Annex XXII.A.
Experience of Italy in the production of external trade statistics on natural gas and
electricity
22.A.1. Background for the development of the new approach in Italy. The increase in the
relevance of the European electricity market as the reference market for commercial and
financial transactions, and the introduction of some relevant changes in national fiscal regulation,
have led to a dramatic rise in measurement problems associated with the compilation of external
trade statistics in natural gas and electricity based on customs data. The key measurement
problems associated with customs declarations are due to the increasing relevance of
international operations not associated with the physical movements of the goods across national
borders and, from the respondent side, to the lack of information on the partner country as
defined by EU regulation and compilation manuals. These measurement issues have generated
some relevant data-quality problems in provisional figures already published by ISTAT on the
external trade of electricity and natural gas. In particular, these provisional data were affected by
overestimation and incorrect allocation of trade by partner country. The reference data sources
used to benchmark customs data against external trade ―real figures‖ in volume are Terna S.p.A.,
Italy‘s national grid operator for transmission and dispatching of electricity, and Snam Rete Gas
S.p.a, Italy‘s natural gas operator.
22.A.2. Methodology. In the new data production system, figures on total exports and imports
of natural gas in the gaseous state and electricity measured as physical quantities are collected
monthly from reliable sources, while for the other data required by European statistical
regulations (total trade in values and breakdown of volumes and values by partner countries),
new estimation procedures have been designed, tested and implemented. Table XXII.A.1
provides the list of new information sources (for a description of the methodological approach,
see box XXII.A.1).
22.A.3. Conclusions. The revisions of the trade values of natural gas and electricity due to the
introduction of the new estimation methodology were quite considerable. The introduction of
this new data production system for external trade in electricity and natural gas has produced the
following benefits:
Increase in the data quality of national figures
Improvement in mirror study comparisons
Reduction of the statistical burden on the respondents from 2012 onward
Table XXII.A.1
Data sources used for the compilation of external trade in electricity and natural gas in the
gaseous state
National or international
data providers
Description of information
available in the data sources
Availability of
information on
“partner country”
Codified
variables
Terna S.p.A. (the national
grid operator for
transmission and
dispatching of electricity)
―Commercial‖ external trade
of electricity measured in
physical units (gigawatt-hours
(GWh))
No, concerning only
entry and exit points
at the national
borders
Q (E)
270
European electricity markets
(GME, Epex Spot, Power
Exchange Central Europe,
OMEL)
Average monthly single price
(PUN) on the Italy‘s
electricity market and average
monthly electricity prices on
the main European markets
Yes P (E)
ENTSO (European Network
of Transmission System
Operators for Electricity)
Electricity trade between
European countries measured
in physical units
Yes W (E)
Enerdata Electricity country
surplus/deficit
Yes W (E)
Snam Rete Gas S.p.a (the
natural gas transporter,
monitoring entry and exit
points for natural gas)
External trade of natural gas
measured in physical units
(gigajoules (GJ))
No, concerning only
entry and exit points
at the national
borders
Q (G)
Ministry of Economic
Development
Natural gas external trade by
partner country
Yes W(G)
ISTAT-customs agency Import and export unit values
for natural gas
Yes P (G)
Box XXII.A.1
Methodology for estimation of monthly trade in electricity and natural gas, Italy
(a) Quantity flows by partner country
In the case of Italy‘s external trade in electricity and natural gas in the gaseous state,
quantity data by partner country are not directly available from the reference data source.
Therefore, they are estimated on the basis of physical quantities crossing each point of entry or
exit at the borders of Italy and a weighting structure which connects each entry and exit point
with a set of partner countries, as follows:
,
where represents trade quantity in period t with partner country i {1, …, I}, while
represents trade quantity in period t through the entry or exit point j { 1, …, J}. The weights
represent the share of the trade through entry or exit point j that is allocated to partner country i.
Notice that each partner country i can be associated to more than one entry and exit point
j, and thus the analysis of external trade flows by entry and exit points leads to a more accurate
decomposition of trade in volumes by ―real‖ partner countries.
For electricity, an in-depth investigation of trade flows through the European network
was carried out in order to estimate the weight structure, , considering national electricity
surplus and deficit as constraints. This approach allows discrimination between ―real‖ partner
countries and other countries which are totally or partially crossed by physical flows of
electricity through the network but are not relevant according to statistical definitions. A similar
approach was adopted for the estimation of quantities of trade in natural gas by partner country,
but the weights were directly obtained from data provided the Ministry of Economic
Development.
271
(b) Monthly prices
Owing to differences in the availability and reliability of data from the respective sources,
the estimates of monthly prices associated with trading transactions involving electricity and
natural gas follow two different approaches.
For natural gas, unit values computed from custom data are used as price indicators. In
the case of electricity, a preliminary comparison of time series for unit values of ISTAT‘s
sources, average monthly national single price (PUN) on Italy‘s electricity market, and average
monthly electricity prices picked up from the main European markets has been carried out.a
Electricity import prices from ―statistical country‖ i have been defined as a weighted average of
the average monthly single price (PUN) on the Italy‘s electricity market and the average monthly
electricity prices on the main European markets, as follows:
iFOREIGNimp
i tPtPUNtEP )()1()();( .
Instead, export prices have been defined as the average monthly electricity prices on the main
European markets, as follows:
iFOREIGN
i tPtEP )();(exp
. a The comparison shows that unit values associated to custom declarations lie in an interval defined by the PUN as
upper limit and by the partner-country national price as lower limit, with a progressive convergence to the partner-
country national price. Main traders confirmed this price behaviour.
273
Chapter XXIII
Ships and aircraft
23.1. Introduction. The present chapter discusses the problem of identifying and recording
trade in ships and aircraft216
and indicates the means through which this trade can be captured in
an internationally comparable way. Possible data sources are discussed, as well as the issue of
leasing. The available data indicate that there is a need to improve the statistical recording of
ships and aircraft.217
This chapter is linked with chapter XX as the refitting of a ship or aircraft
can be viewed as a good for processing. The compilation of data on trade in aircraft and ships
frequently requires the use of non-customs sources. Therefore, this chapter is linked with
chapters III and IV, on the use of non-customs sources of data, and also with chapter VII, which
discusses the integration of data from different sources.
A. Difficulties encountered in the measurement of trade in ships and aircraft
23.2. Physical movement and change of ownership. The compilation of trade statistics is based
on the physical movement of goods across borders which is captured by customs records. Large
parts of trade in ships and aircraft do not physically pass through customs, and customs often
does not receive any declarations. Further, it is not necessarily obvious when a physical
movement of a ship or aircraft is part of a trade transaction. Therefore, IMTS 2010 recommends
in exceptional cases, such as that of trade in ships and aircraft, when the general guideline is not
applicable or not sufficient, to use the criterion of change of ownership to determine whether
certain goods should be recorded.218
Change of ownership is defined in accordance with the 2008
SNA219
and BPM6220
as change of economic ownership. When the criteria of change of
216
Rigs for oil production might be included in this category of goods as well. For example, in the European Union,
transactions in oil rigs are treated in the same way as transactions in vessels if these structures are floating as
opposed to being fixed. For the treatment of fixed installations or installations in general, see para. 6.8.
217 For 2009, countries reported collectively US 141 billion in exports of ships (Standard International Trade
Classification (SITC) section 793) but only US 57 billion in imports. While trade has increased dramatically, this
pattern has persisted for many years. The registration of ships under so called flags of convenience in a limited
number of relatively small countries appears to be a major reason why imports are underreported globally. Some of
these countries do not report their trade data internationally. However, if the registration of ships is open to owners
that are not resident in these countries those ships registered under foreign owner should not be included in their
trade statistics in any case. For 2009, countries reported over 41 billion in exports of ships (SITC group 793) to only
three countries: Panama, Marshall Islands and Liberia, which either do not show any such imports or do not report
trade data. The worldwide trade in aircraft (SITC group 792) shows global exports as having systematically
exceeded imports by a wide margin until 2008, but the margin was not as large as that for ships (the figure for
exports for 2009 was distorted owing to the lack of detailed commodity reporting of a major exporting country). See
2009 International Trade Statistics Yearbook, vol. II, Trade by Commodity (United Nations publication, Sales
No.E.II.XVII.3H).. Available from http://comtrade.un.org/pb/.
218 See IMTS 2010, para. 1.4. Categories of goods where the criterion of change of ownership can be applicable for
the recording of international merchandise trade transactions are ships and aircraft (para. 1.29), satellites and their
launchers (para. 1.33), power lines, pipelines and undersea communications cables (para 1.36) and mobile
equipment that changes ownership while outside the country of residence of its original owner (para. 1.39).
219 System of National Accounts 2008 (2008 SNA), European Commission, International Monetary Fund,
Organization for Economic Co-operation and Development, United Nations, World Bank; available in PDF format
at the website of the United Nations Statistics Division at http://unstats.un.org/unsd/nationalaccount/sna2008.asp.
274
ownership is used for the recording of goods in IMTS, an export of a good should be recorded
when the economic ownership changes from a resident unit to a non-resident unit and an import
recorded when the change is from a non-resident to a resident unit. However, the application of
these criteria requires a data source that will provide reliable information on the change of
ownership of ships and aircraft. While national (or international) ship and aircraft registers are in
general viewed as possible sources of such information, they might not, as is explained further in
the next section, be available or provide the required information.
Box XXIII.1
Ownership, institutional unit and residence
Ownership. Two types of ownership can be distinguished: legal ownership and economic
ownership. The legal owner of entities such as goods and services, natural resources,
financial assets and liabilities is the institutional unit entitled in law and sustainable under the
law to claim the benefits associated with the entities. The economic owner of such entities is
the institutional unit entitled to claim the benefits associated with the use of the entity in
question in the course of an economic activity by virtue of accepting the associated risks.
(2008 SNA, para. 10.5). Every entity (i.e., every good such as an aircraft) has both a legal
owner and an economic owner, though the economic owner and the legal owner of an entity
(e.g., an aircraft) can be the same (ibid., para. 10.6). A legal owner may contract with another
unit for the latter to accept the risks and rewards of using the product in production in return
for an agreed amount that has a smaller element of risk in it. Such an example is when a bank
legally owns a plane but allows an airline to use it in return for an agreed sum. (ibid., paras.
2.46-2.49 and 3.21-3.29)
Institutional unit. An institutional unit is an economic entity that is capable, in its own right,
of owning assets, incurring liabilities and engaging in economic activities and in transactions
with other entities (ibid, para. 4.2).
Residence. The residence of each institutional unit is the economic territory with which it has
the strongest connection, in other words, its centre of predominant economic interest (ibid.,
paras. 4.10-4.15).
Clarification: A resident institutional unit can be partially or entirely owned by a non-
resident institutional unit and a change of ownership can take place between the parent and
its affiliate resident in another country.
23.3. Processing versus repair and services transactions (without change of ownership). Ships
and aircraft can enter a country for outfitting or partial refitting, sent by a foreign owner who
retains ownership. There is the practical issue of obtaining information on such transactions on
both the side of the sending (exporting) country and the side of the service-providing or
processing country. However, apart from the practical issue of how to capture these transactions,
there is also a need to decide whether a given transactions is a repair or other service, or a
processing transaction (see chapt. XX for details). If it has been determined that a ship or aircraft
is sent for processing and assuming that the general guideline can be applied, an import would
have to be recorded when the good enters the country and an export when the good leaves the
country after processing. The recording of a goods transaction requires valuation at gross value,
220
International Monetary Fund, Balance of Payments and International Investment Position Manual, Sixth Edition
(BPM6) (Washington, D.C., 2009). Available from http://www.imf.org/external/pubs/ft/bop/2007/bopman6.htm.
275
meaning valuation at the full transaction value of the ship or aircraft. Given the high value of
some aircraft and ships, the merchandise trade statistics of countries can be strongly affected by
only a few of such transactions. Therefore compilers are advised to inform users in the metadata
about such transactions and their treatment.221
Further, countries might consider cooperating with
their trading partners regarding the recording of these transactions in order to achieve uniformity
in recording and to improve international comparability. This is of particular importance as the
sending (exporting) country might not have any information at all about such transactions, while
the service-providing or processing country should be well aware of large outfitting and refitting
activities taking place in its economic territory.
23.4. Recording of partner country. Aircraft and ships, when used in one country and then
exported to another country, will always retain the same country of origin. This is the case for
almost all other used goods (see chapt. XVI for details). IMTS 2010 (para. 6.26) recommends
that the country of consignment be recorded for imports as second partner attribution, alongside
country of origin. Compilers and users might view that the country of consignment provides
more useful information on the trade of ships and aircraft (and other used goods). Therefore, it is
good practice to provide this kind of partner information in addition to, and not as replacement
for, the data on compiled on a country-of-origin basis.
Box XXIII.2
Recording of trade in an aircraft: example of Canada
A company in country A buys an aircraft built in Canada, which is treated as a domestic export
of Canada. After several years of use, the original aircraft is traded in for a newer model. The
original aircraft is returned to Canada for refurbishment and subsequent sale to country B. The
return of the aircraft is treated as a Canadian reimport and the subsequent sale treated as a
domestic export.
B. Existing possibilities for obtaining information on the trade in ships and aircraft
23.5. Customs records and national ship and aircraft registers. When aircraft and ships cross
the borders of countries as items of trade and the appropriate customs records are created, those
records should be used as the main source of information. However, in some countries,
international trade in aircraft and ships may not be recorded by customs even if those items cross
borders; also, customs records may be incomplete or non-existent if those items do not cross
customs borders.222
Under such circumstances, many countries turn to national aircraft and ship
221
Compilers of IMTS might wish to exclude the retrofitting or outfitting transactions on the basis that they entail
only a temporary movement of a good and that including them would distort the trade statistics. There can be
borderline cases and it is for the national compiler to decide whether the transaction constitutes processing, or a
service or repair. However, to exclude processing activities involving ships and aircraft in general cannot be
recommended. It should be considered that other processing operations also entail the recording of high values for
imports and exports while the actual value added may be relatively minor. The individual value of such transactions
might be very small compared with the value of a ship or aircraft but the value of the sum of such transactions can
easily equal or exceed the value of the trade in ships and aircraft.
222 A similar situation might exist in the case of trains which regularly cross borders. Also, in this case, it might be
necessary to use the change of ownership and not the crossing of the border as the criteria on determining whether a
trade transaction is to be recorded. Enterprises that own and/or operate or produce and sell trains should be able to
provide information about the acquisition and sale of trains.
276
registers for evidence of a trade transaction, using change of ownership as indicated in the
register as the basis for the compilation of trade statistics. However, not all countries have
national aircraft and ship registers and some might not use existing registers for statistical
purposes. Further, the registers might not cover all transactions between residents and non-
residents,223
or might not be sufficiently updated, or the information might not be suitable or
sufficient for use. In particular, such registers might contain information on the legal owner
while it is information on the economic ownership that is required. Therefore, in addition to
registers, countries might have to consider using additional sources such as accounts of
companies or reviewing leasing contracts or management contracts (for vessels) to establish
economic ownership.
23.6. International requirements for the registration of aircraft. Various national and
international statutory instruments govern civil aviation and the registration of aircraft. Of
particular international importance is the Convention on International Civil Aviation, which
specifies the principles to be recognized by signatories.224
The Convention states that aircraft
shall hold the nationality of the country in which they are registered.225
It also states that aircraft
may not be legally registered in more than one country,226
and that every aircraft used for
international air transport must be marked with its nationality and registration number.227
At the
national level, those global rules mean that every aircraft is entered in the national register when
it is licensed for transport. In the case of imported aircraft, registration can occur only upon the
applicant‘s producing appropriate documentation; in particular, the applicant must produce proof
of acquisition of ownership. However, at least in some countries, not only the acquirer (legal
owner) but also the economic owner/operator can be the applicant. Also, proof of cancellation or
non-registration is required, which ensures that an aircraft has actually been registered in one
country only, thus ruling out duplication or incorrect recording.
23.7. International requirements for the registration of ships. As a measure for enhancing ship
safety and security, the International Maritime organization (IMO) introduced in 1987 the IMO
ship identification number scheme, which became mandatory for all ships as of 1 January 1996 and
which is managed by IMO and IHS Fairplay (previously called Lloyd‘s Register - Fairplay).228
Its was to aim assign a permanent number to each ship for identification purposes. That number
would remain unchanged upon transfer of the ship to other flag(s) and would be inserted
in the ship's certificates. Further, in 2004 229,
the IMO Unique Company and Registered
223
For example, in the European Union, fishing vessels are in general not registered in the national ship registers, as
indicated by the results of an EU questionnaire.
224 See the Convention on International Civil Aviation. Available from http://www.icao.int/publications/pages/
doc7300.aspx. There are currently 191 contracting States parties to the Convention.
225 Convention on International civil Aviation, part I, chap. III, article 17.
226 Ibid., article 18.
227 Ibid., article 20.
228 See International Maritime Organization, Circular letter No. 188/Rev.3 of 11 December 2006 on the
implementation of resolution A.600(15): IMO ship identification number scheme.
229 See International Maritime Organization, Circular letter No.2554/Rev.1, 7 February 2007 on implementation of
the IMO Unique Company and Registered Owner Identification Number Scheme (resolution MSC.160(78)).
277
Owner Identification Number Scheme was introduced as a measure to enhance maritime safety,
security and environmental protection, and to facilitate the prevention of maritime fraud. Its
purpose is to assign a permanent number for identification purposes to each company and/or
registered owner managing ships of 100 gross tonnage and above engaged on international
voyages. 230, 231
The IMO Unique Company and Registered Owner Identification Number
Scheme is managed, in parallel with the IMO Ship Identification Number Scheme (resolution
A.600(15)) and procedures for the implementation thereof (Circular letter No.1886/Rev.3),
without charge by IHS Fairplay.
23.8. Request for additional documentation. The statistical authority should use available
customs information and aircraft and ship registers for obtaining the maximum amount of
statistical information possible and, if necessary, should request the owners named on the
register or the leaseholder named on the financial lease to submit separate foreign trade statistics
declarations. The last-mentioned step may have to be implemented through the enactment of
legislation specifying the obligation of each party (the registration authority, owners,
leaseholders) to provide information.
C. Improving the international measurement of trade in ships and aircraft
23.9. Best possible use of available data sources. In the absence of customs records, the use of
national registers for ships and aircraft is the established practice in many countries. Countries
need to review the contents and completeness of their national registers (including their law of
the flag etc.) and they might use available international registers and special surveys of ship and
aircraft operators to identify economic ownership and change of economic ownerships for ships
and aircraft.232
Relevant information could also be available from accounts of companies and
from the review of leasing contracts or management contracts (for vessels). However, it appears
that countries are not availing themselves at this time of the option of reviewing leasing contracts
or agreements on the management and operation of ships and aircraft to determine economic
ownership.
23.10. Need for reliable criteria to identify change of ownership. Countries should establish
reliable criteria for the identification of change of economic ownership of ships and aircraft and
provide information in this regard in their metadata. On the national level, such criteria should be
established in cooperation with national accounts and balance-of-payment compilers. However,
an international approach and agreement on such criteria are required in order that uniform
treatment of transactions and international comparability of data may be achieved. For example,
reliable criteria could be established in the form of a list of different types of leasing contracts
and agreements on the operations of the ships and aircraft, to be analysed in respect of whether
they entail a transfer of risks and rewards, as required for change of economic ownership. For
230
Countries are invited to register ships engaged in domestic voyages as well.
231 However, fishing vessels might not be registered in this standard way.
232 In the case of ships, the flag administrations (national registers) establish a regular and standardized electronic
data exchange procedure with HIS Fairplay on a fleet basis which includes data not only on the company/registered
owner but also on the ships. The information is made available to IMO members on the Global Integrated Shipping
Information System (GISIS).
278
aircraft, leasing plays a predominant role, while for vessels, different kinds of agreements
concerning their operation and management are relevant.
23.11. An international approach regarding the identification of change of ownership and the
recording of trade in ships and aircraft. International cooperation and the development of a
common approach and common criteria for the identification and recording of change of
ownership offer possibilities for improving the statistical recording of trade in ships and aircraft.
For example, as a first practical step, countries could pool and compare their information on
major transactions using universal ship or aircraft identification or production numbers.
However, countries might not have sufficient access to such information on national level or it
might be preferable for other reasons to follow the existing national approach.
23.12. Conclusions. The task of compilers of merchandise trade statistics is to identify non-
reported transactions and to verify reported transactions. The development of a more
comprehensive set of case studies, as currently conducted by Eurostat, can assist countries in
performing this task.233
D. Leasing of ships and aircraft
23.13. Financial and operating leasing. A financial lease is one where the lessor, as legal owner
of an asset, passes the economic ownership to the lessee, who then accepts the operating risks
and receives the economic benefits from using the asset in a productive activity. In return, the
lessor accepts another package of risks and rewards from the lessee (2008 SNA, para.17.304).
Under a financial lease, the legal owner is shown as issuing a loan to the lessee, with which the
lessee acquires the asset (ibid.). An operating lease is one where the legal owner is also the
economic owner and accepts the operating risks and receives the economic benefits from the
asset by using it in a productive activity (ibid., para. 17.301; see also paras. 17.302-17.303 and
17.305-17.309).
23.14. Financial leasing. One indicator of a financial lease is that it is the responsibility of the
economic owner to provide any necessary repair and maintenance of the asset (ibid., para. 304).
Very often, the nature of the asset subject to a financial lease may be quite distinct from the
assets used by the lessor in his productive activity, for example a commercial airliner legally
owned by a bank but leased to an airline (ibid., para. 17.305). A financial lease will typically be
for several years and in practice, the duration of a lease has been and can be used in some cases
as indication of whether a lease is financial (of one year or more) or operating (of less than one
year).234
However, the duration of the lease as such does not determine whether the lease is to be
regarded as an operating or financial lease (see 2008 SNA, para. 17.308.). In some cases, a large
complex such as an airport or even a building may be leased for short periods, perhaps only one
year at a time, but on condition that the lessee takes all responsibility for the asset, including all
maintenance and cover for exceptional damage, for example (ibid.). The allocation of risks and
rewards associated with the use of an asset provides the ultimate criterion for deciding whether a
233
Eurostat, ―Methodological questions from member States relating to the trade in ships and aircraft‖, internal
document, 28 November 2011.
234 See IMTS 2010, para. 1.28.
279
lease is to be considered financial (and the good to be included in trade statistics) or operational
(ibid., paras. 17.301-17.309).
23.15. Examples of financial and operational leasing. It is only in the case of financial leasing
that a change of economic ownership takes place. ―Dry‖ leasing is a leasing arrangement
whereby the lessor provides an aircraft without crew, insurance, supporting equipment,
maintenance, etc., to the lessee. It is required that the lessee put the aircraft on its own air
operator‘s certificate (AOC)235
and provide the aircraft registration. While based on these
characteristics, a dry lease would usually be a financial lease, a dry lease can also be structured
so as to constitute an operational lease. A ―wet‖ lease is an operating leasing arrangement
whereby the lessor provides the aircraft, one or more complete crews (including engineers), all
maintenance for the aircraft and insurance (ACMI). The period of a wet lease can range from one
month to, usually, one to two years. Any arrangement of less than one month‘s duration can be
considered adhoc charter.
23.16. Sale and leaseback. Another frequent leasing agreement for aircraft is sale and leaseback.
Under this agreement, an airline would sell an aircraft to a financial investor under the agreement
to rent it back immediately. Most of the time, the sale and leaseback agreement amounts to an
operating lease, which means the initial sale must be recorded as a trade transaction if it takes
place between a resident and non-resident. However, there might be also cases in which the
leasing agreement that follows the sale has to be viewed as a financial lease; hence, no sale or
goods transaction is to be recorded, as the seller gives up only his legal but not his economic
ownership (see BPM6, para. 5.57, which provides examples of situations that would normally
lead to a lease‘s being classified as a financial lease).
235
Air operator's certificate (AOC) is the approval granted by a national aviation authority (NAA) to an aircraft
operator for its use of the aircraft for commercial purposes. This requires the operator to have personnel, assets and
system in place to ensure the safety of its employees and the general public (see Convention on International Civil
Aviation, Annex 6, entitled ―Aircraft operations, maintenance and general aviation‖).
280
E. Country experiences in the compilation of data on trade in ships and aircraft
23.17. Compilation of data on trade in aircraft: experience of Morocco. Information related to
the importation of airplanes and their equipment is collected from Morocco‘s customs services
(the Office of Exchange) and from its main airline company. The Office of Exchange collects a
customs declarations (single declaration of goods (DUM)) of all the transactions related to the
importation of planes. These statements include the following: customs office where the
declaration was lodged, customs regime, year, declaration number, number of articles, date of
recording, date of reception, location and trade registry of merchant, corporate name, country of
origin, country of provenance, currency and value in currency, total value, total gross weight,
total net weight, HS code, net weight of a unit, value of a unit, supplementary unit, and code of
supplementary unit. At the same time, these data are cross-checked with information contained
in reports transmitted by Morocco‘s aforementioned airline to the Department of Foreign Trade
Statistics of the Office of Exchange for balance-of-payments purposes. These reports specify the
transaction (importation) financing modalities. In this respect, it should be added that the airline
company sometimes uses leasing for its acquisitions of planes. Only planes subject to leasing
contracts of one year or longer are regarded as having changed ownership and only for those
planes is a trade transaction recorded.
23.18. The experiences of Italy and Norway in the compilation of data on external trade in ships
and aircraft. The experience of Italy in compiling external trade in ships and aircrafts is
presented in annex XXIII.A. The background, methodology and data sources are explained and
conclusions as well as two illustrative examples are provided. Annex XXIII. B. presents the
experience of Norway in the compilation of information on the trade in ships.
281
Annex XXIII.A.
Compilation of data on external trade in ships and aircraft: experience of Italy
23.A.1. Background. In 2010, European legislation took on board United Nations directives
concerning the use of ―economic ownership‖ as the key concept to be used in defining external
trade of vessels and aircraft. In order to comply with the new legal framework, Italy put in place
an adhoc procedure designed to determine the best classification and measurement of external
trade for this kind of goods.
23.A.2. Methodology. The first assumption made by Italy in implementing this new definition
has entailed the adoption of the economic concept of operator as a reasonably good proxy for
identifying the economic owner:
For vessels, the operator is ―the natural person or the legal unit responsible for the
commercial decisions concerning the employment of a ship and the one who decides
how and where that asset is employed. The direct beneficiary of the profits from the
operations of the asset may also be responsible for purchasing decisions on bunkers
and port services‖.
The term ―air operator‖ refers to a natural person residing in a member State or a
legal unit established in a member State that uses one or more aircraft in accordance
with the regulations applicable in that member State, or a European Union air carrier,
as defined in European Union legislation (Council Regulation (EEC) No. 3922/91 of
16 December 1991 on the harmonization of technical requirements and administrative
procedures in the field of civil aviation).
23.A.3. Partner-country identification. The partner country is the place where the operator is
established. This definition may have some flaws, but in most cases, it has proved to be the best
proxy available. The assumption that the operator is a good proxy for the new concept of
economic owner paves the way for the adoption of additional data sources for the correct
classification and measurement of external trade of vessels and aircrafts.
23.A.4. Data sources. Given the complexity of the definition and measurement of trade in
vessels and aircrafts, it was recognized that a single data source could not comply with the legal
requirements (involving, for example: different managements of vessels/aircraft registers and
completeness of data source). Consequently, a set of different data sources were identified:
standard customs data, the Fairplay World Register236
of ships and, where possible, multilateral
cooperation and exchange of information between partner countries. Finally, a case-study
approach has been used, in order to optimally exploit the integration of all the available
information.
23.A.5. Conclusions. The results are twofold: only statically relevant transactions are recorded;
and problems of over- and underestimation, linked to each single source, are overcome. For
example, customs information may overestimate the data when a sale or acquisition takes place
236
The Fairplay World Register is an international database developed and maintained by IHS Fairplay for maritime
safety (according to international agreements) and business purposes, based on direct contact with the respondents,
profiling of complex multinational corporations and publicly available information (e.g., from the Internet and
newspapers).
282
without a change of economic ownership; vice versa, there may be an underestimation when a
transaction according to the concept of economic ownership occurs without the obligation of
providing a customs/fiscal declaration (for example, without a sale/acquisition of the vessel
itself); in this latter case, the Fairplay World Register of ships is most useful. It must be noted
that the above procedure is highly advantageous in terms of quality but highly time-consuming at
the same time. Hence, for smaller transactions (in terms of value), only customs data, data from
the Fairplay World Register of ships and, possibly, direct contacts with the respondents are
integrated, while a total casestudy is carried out for larger transactions.
23.A.6. Two illustrative cases. In the first case, a shipbuilding company in Italy sold a super-
luxury cruise ship to a company established in an offshore country and regularly presented a
customs declaration. However, the economic owner was another company based in Italy, which
used the ship to organize cruises. This transaction was excluded from Italy‘s foreign trade data,
because the seller and the new economic owner were established in the same country. In the
second case, a shipbuilding company in Italy sold a super-luxury cruise ship to a multinational
corporation established in the United States of America. However, the operator of the asset was a
company belonging to the same corporation established in the United Kingdom of Great Britain
and Northern Ireland. Hence, a transaction between Italy and the United Kingdom was recorded.
In both cases, all the above mentioned sources were crucial to decision-making.
283
Annex XXIII.B.
Compilation of data on external trade in ships and aircraft: experience of Norway
23.B.1. Use of ships registers in Norway. In Norway, the external trade of ships, aircrafts and
movable drilling rigs is not properly covered by data from customs. Concerning ships, estimates
based on change of ownership are used as an alternative. Statistics Norway regularly receives
information from Norway‘s shipping registers (NIS and NOR) about new registrations,
cancellations and other changes in the registers. Based on this information, a letter and a form are
sent to the registered owner, asking for additional information. For exports (sale of ships),
identification of the former owner, name of new owner, home country and new flag State, date of
change of ownership, type of ship, gross tons and actual price are requested. For imports
(purchase of ships), the name of previous owner, home country, previous flag State, date of
change of ownership, type of ship, gross tons and, last, actual price are requested. Frequently,
ships and aircrafts are leased, requiring clarification on whether a change of ownership took
place.
23.B.2. Leasing: approach of Statistics Norway. It is difficult to secure information on when a
leasing agreement was established. Consequently, Statistics Norway is, to a large extent,
dependent on occasional information. However, in regard to the handling of financial and
operational leasing, Statistics Norway makes a pragmatic judgement based on (a) who has the
equipment registered in his balance sheet (and pays for all maintenance and repairs) and (b) the
length of the period of the contract (one year or more). If the length of the period is more than
one year and it is not the lessor who pays all expenses, the transaction is considered to be export
or import of goods. Otherwise, it is registered not as trade in goods but as trade in services.
Box XXIII.B.1
Differentiating between operating and financial leasing
Operating leasing and financial leasing represent two different forms of ownership. Under an
operating lease, a lessor owns the equipment and pays for all necessary investments. The lessor
retains the residual value of the equipment and takes it back when the leasing period expires.
When using financial loan products such as financial leasing, overdrafts and loans, the borrower
himself is the owner of the equipment and finances 100 per cent of its value. In operating leases,
therefore, the value of the equipment is kept off the balance sheet and the leasing costs are posted
in their entirety as direct costs linked to the use of the equipment. In financial loan products, the
equipment is carried on the balance sheet and the company itself must administrate and allocate
all costs and depreciations linked to the equipment in order to produce a correct picture of overall
financial implications. Operating leasing also provides external invoice control. The lessor, who
owns the equipment, pays all accounts and determines whether it is in accordance with the
agreements signed. The lessee simply receives periodic invoices for the lease.
23.B.3. Data compilation. The data on trade of ships, including transport and procedure codes,
are manually registered in the Statistics Norway general trade database. It will normally take
about two months to collect data, sometimes even longer. However, the data are registered in the
month of the change of ownership. This exercise does not cover trade of ships of Norway
registered in foreign registers if the trade ends up registered in another country‘s register.
However, it is assumed that such activity is very limited, and at the moment it is ignored.
284
23.B.4. Ships of Norway under foreign flag. Regarding the issue ships of Norway under foreign
flag, Statistics Norway used to depend on information (electronic data) from Lloyd‘s Fairplay
Register. However, this has been discontinued based on the consideration of the costs and
benefits of subscribing to the monthly updates, which means that new effective sources are
sought after. Equasis, a free source, might be used. 237
Statistics Norway is also considering
establishing a small annual survey of large shipping companies in order to obtain an alternative
estimate of the magnitude of this activity. This work has not been yet concluded.
237
http://www.equasis.org/
285
Chapter XXIV
Other special categories of goods and compilation for national accounts and balance-of-
payments purposes
24.1. Introduction. The present chapter is intended to briefly describe the characteristics and
measurement of certain additional categories of goods where the application of the general
guideline can pose difficulties and/or where their compilation is relevant and of special interest
for national accounts (NA) and balance-of-payment (BOP) compilers. Further, it discusses how
IMTS and BOP compilers could work together in capturing the trade in these goods. The
differences in recording in IMTS and balance of payments of certain categories of goods or
transactions are described.238
While this chapter is complementary to chapter XIX which focuses
on the scope of IMTS in general terms and to chapters XX-XXIII, which cover specific
categories of goods, it adds a new dimension, as it systematically discusses the relationship
between the compilation for merchandise trade and that for national accounts/balance of payment
purposes. However, where applicable, this relationship is also discussed in the other chapters of
part four of the Manual (see, in particular, chapter XX on goods for processing).
A. Goods to be recorded similarly in IMTS and BPM6/National Accounts
24.2. Goods and services. The identification and compilation of trade in certain categories of
goods pose similar or related challenges for compilers of merchandise trade and balance-of-
payments/national accounts statistics. The present section lists categories of goods that are to be
recorded in IMTS and BPM6 identically. Compilers of IMTS and BPM6 can benefit from each
other‘s experiences and practices in the identification of these goods (e.g., in the distinction
between financial and operating leasing) and the use of additional data sources. As, often,
transactions not included under goods trade need to be included under services trade, BPM6
compilers would be interested in knowing how the goods transactions are differentiated from the
related services transactions in IMTS in order to avoid double-counting or under-coverage (e.g.,
in the case of media, whether or not recorded). Hence, it is a good practice if both work closely
together.
Box XXIV.1
Definition of goods for the purpose of IMTS 2010
For the purpose of IMTS 2010, and in reference to the 2008 SNA, goods are defined as physical,
produced objects for which a demand exists, over which ownership rights can be established and
whose ownership can be transferred from one institutional unit to another by engaging in
transactions on markets, plus certain types of so-called knowledge-capturing products stored on
physical media that can cross borders physically.a
a See IMTS 2010, para. 1.5. See also IMTS 2010, annex A, paras. A.2-A4, and 2008 SNA, paras. 6.15 and 6.22.
24.3. Goods acquired by all categories of travellers, including non-resident workers, to a
significant scale as defined by national law, are to be included in IMTS (see IMTS 2010, paras.
238
For a detailed description of the conceptual differences between the recommendations for IMTS (IMTS 2010)
and those for balance of payments (BPM6), see IMTS 2010, annex F, which also contains a reconciliation table
between IMTS and total goods on a balance-of-payment basis.
286
1.16 and 1.49 (a)) and in BPM6 under goods (see BPM6, paras 10.19-10.20), while goods below
the threshold have to be recorded as part of travel services (BPM6, paras. 10.86-10.90) .
24.4. Media, whether or not recorded (see IMTS 2010, paras. 1.18, and annex F, para. F.5). It
is recommended that media whether or not recorded be included in IMTS, except for media used
for carrying customized software or software written for a specific client or originals of any
nature, although exclusion of such media may not be possible in practice. Such exclusions should
be based on the definitions recommended in BPM6 and should be established in close
cooperation with the compilers of balance-of-payments and international trade in services
statistics (see BPM6, table 10.4; and MSITS 2010, table III.1). It is recognized, however, that the
exclusion of such media may not be possible in view of (a) the prevailing customs practice of
classifying both non-recorded and recorded media in one classification heading without any
further differentiation and (b) the absence of other reliable and cost-effective data sources for
systematic identification. BPM6 includes in general merchandise only non-customized packaged
software and video and audio recordings on physical media, such as disks and other devices,
with a licence for perpetual use (see BPM6, paras. 10.17 (c) and 10.143-10.144).
24.5. Goods under financial and operating leasing (see IMTS 2010, paras. 1.28 and 1.51).
There are two kinds of leases in common usage: financial leases and operating leases. Goods are
considered to be under financial lease if the lessee assumes the rights, risks, rewards and
responsibilities in relation to the goods and can, from an economic point of view, be considered
the de facto owner.239
Goods under financial leases should be included in international
merchandise trade statistics. An operating lease is any lease that does not have the above
characteristics. Goods under operating leases should be excluded from international merchandise
trade statistics. In practice, it may be difficult to differentiate between these two types of
leases.240
Therefore, in some cases, the duration of the lease can be used as an indication of
whether the lease is financial (of one year or more) or operating (of less than one year). The issue
of differentiating goods under financial leases and operating leases is described in chapter XXIII
for ships and aircraft, as leasing transactions for these categories of goods, in particular aircraft,
are very common.
24.6. Fish catch, minerals from the seabed and salvage (see IMTS 2010, paras.1.31, and annex
F, para. F.19). These goods landed from vessels of one country in national ports of another
country or acquired by vessels of one country on the high seas from vessels of another country
are in the scope of IMTS 2010 for both exports and imports and should be recorded where
economically or environmentally significant. It is recognized that data collection in respect of
this category of goods may be challenging, in particular for transaction taking place outside own
economic territory. However, countries are encouraged to develop over time the necessary data-
collection and/or estimation procedures in view of the important policy needs; the balance of
payments has always included these goods and BOP compilers might have appropriate
compilation and estimation methods in place.
239
See IMTS 2010, annex A, para. A.11.
240 See also BPM6, para, 5.57.
287
Box XXIV.2
Example: compilation of data on fish caught by Norwegian vessels outside the custom
territory of Norway and landed in national ports of other countries
Fish caught by Norwegian vessels outside Norway‘s custom territory and landed in ports of other
countries is not declared at the Norway‘s customs. However, the Ministry of Fisheries and
Coastal Affairs administers a system of fish export taxes which requires registration of all
catches, even those caught outside Norway‘s custom territory.
The Directorate of Fisheries is responsible for controlling the fish exports and ensuring that the
fishing vessels comply with the rules. Fishing vessels have to report to the Fishermen's Sales
Organization Council, which reports in turn to the Directorate of Fisheries.
Customs is responsible for collecting the tax but does not have all information needed to produce
trade statistics. Thus, Statistics Norway has established an agreement with the Directorate of
Fisheries by which Statistics Norway receives a monthly report covering all export of fish caught
outside the territory of Norway and landed abroad. The data include information on the date of
landing, landing port and country, and the type of fish, weight and value. The data are received
two months after the month of landing. Minor control over data quality is exercised by Statistics
Norway.
24.7. Waste and scrap (see IMTS 2010, paras. 1.38 and 1.58). Waste and scrap, including
products that are dangerous to the environment, should be recorded and classified under the
appropriate commodity heading if their commercial value is positive. Waste and scrap having no
commercial value are to be excluded but should be separately recorded using appropriate
quantity units. It is recognized that data collection under this item may be challenging, since, for
example, the value may not be easily available when entering or leaving the country; however,
countries are encouraged to develop over time the necessary data-collection and/or estimation
procedures. Waste and scrap having no commercial value need to be recorded in the balance of
payments under services as a waste treatment and de-pollution service and under environmental
transactions (MSITS 2010, paras. 3.245 and 3.298).
24.8. Goods for repair or maintenance (see IMTS 2010, para. 1.57) are excluded from trade in
goods and to be recorded separately, as these transactions have to be included as repair and
maintenance services in the balance of payments. Compilers of both IMTS and BPM6 face the
challenge of differentiating these goods from goods for processing (see chaps. XIX and XX and
para. 23.3 for details).
24.9. Additional categories of particular relevance to merchandise trade and balance-of-
payments/national accounts compilers. Balance-of-payments compilers have a strong interest in
ensuring that all relevant merchandise trade transactions are included in their statistics.
Therefore, when important trade transactions, such as for electricity, gas or oil, ships and aircraft
or military goods, are not included in the information obtained from customs and trade statistics,
the balance-of-payment compilers use additional sources to obtain this information. It is a good
practice for international merchandise trade statistics and balance-of-payments compilers to work
closely together in the compilation of this information from additional sources, and to ensure that
relevant trade transactions are included in both merchandise and balance-of-payment statistics.
288
24.10. Goods bundled with services (see IMTS 2010, para. 4.15 (g)). Often, the sale of goods is
bundled with the provision of certain services, such as for maintenance or installation. The
appropriate recording of these transactions is not a question of scope (i.e., whether or not to
include the transaction), but rather of valuation. Goods bundled with services should be valued as
follows: the statistical value applies only to the goods, and the value of any services associated
with them should be excluded from IMTS, except for the services that are included according to
the FOB- and CIF-type valuation of goods. However, in practice this might prove difficult for
certain goods such as media (see IMTS 2010, para. 1.18). Goods bundled with services might be
identified by their increased unit value.
B. Goods to be recorded differently in IMTS and BPM6/national accounts
24.11. Conceptual differences and data compilation. The main conceptual differences in the
recording of international transactions in goods between IMTS 2010 and the BPM6/2008 SNA
are described in IMTS 2010, annex F. This chapter briefly discusses the possible collaboration of
IMTS and BPM6 compilers on the compilation of these goods.
24.12. Goods for processing with or without change of ownership (see IMTS 2010, paras. 1.19-
1.21 and F.4). These transactions are to be included in IMTS as trade in goods, while in the
BPM6 the initial trade transaction is to be recorded as trade in services. Chapters XX and XXI
discuss the possible identification of goods for processing and the trade between related parties
in IMTS.
24.13. Returned goods (see IMTS 2010, paras. 1.23 and F.6). If exported goods are subsequently
returned, they should be included in imports and identified as reimports when they are returned.
Similarly, goods imported and subsequently returned should be included in exports and
identified as re-exports when they are returned.241
If returned goods can be identified by IMTS
compilers, e.g., via the special customs procedure code, this information should be made
available to BPM6 compilers in order to allow them to void the initial transactions in their
recording, as required by BPM6.
24.14. Migrants’ effects (see IMTS 2010, paras. 1.26 and F.7). Migrants‘ effects are to be
included in IMTS if they are of a significant scale, while they should be excluded from trade on a
BPM6 basis, as no change of ownership takes place. The exclusion of this transaction in BPM6
would be greatly facilitated if the goods would be specifically identified in the statistical
recording of the customs transactions.
24.15. Goods entering or leaving the economic territory of a country illegally (see IMTS 2010,
paras. 1.59 and F.8). It is recommended that these transactions (which may include legal as well
as illegal goods)242
be excluded from IMTS and separately recorded. BPM6 includes in general
merchandise illegal goods as well as smuggled goods that are otherwise legal (BPM6, paras.
241
There are different cases of returned goods, such as goods returned due to poor quality and goods on consignment
(see IMTS 2010, para. 1.17 above) that are not sold or returned.
242 The illegal entry or exit from the economic territory may refer to both legal and illegal goods, i.e., it is not
necessarily the goods themselves, but the manner in which they enter or leave the economic territory, that is illegal.
289
10.17 (i) and 10.17 (j)). Customs and BOP compilers should work together to assess the quantity
of smuggled goods, e.g., BOP compilers might have an indication from their surveys that
travellers are not properly declaring their goods.
24.16. Goods lost or destroyed after leaving the exporting country but before entering the
importing country and after ownership has been acquired by the importer. It is recommended
that these goods be excluded from IMTS of the importing country but to be separately recorded
(see IMTS 2010, paras. 1.60 and F.9). To support the proper recording of these transaction in the
balance of payments, IMTS compilers should provide this information to BOP compilers.
24.17. Goods imported for construction projects by non-resident enterprises (see IMTS 2010,
para. F.10). Such goods, where these operations are not sufficiently substantial to constitute a
branch of the enterprise, are not recorded as trade in goods in BPM6 (see BPM6, para. 10.22 (d))
but are recorded as exports and imports in IMTS. The specific identification of these goods in the
statistical recording of the customs transactions would be useful to BPM compilers.
24.18. Goods transferred from or to a buffer stock organization. It is recommended that such
goods be included in IMTS (see IMTS 2010, paras. 1.27 and F.11). BPM6 excludes goods
temporarily exported or imported, such as goods for storage, if no change of ownership takes
place (BPM6, para. 10.22 (e)). However, these goods are to be recorded if they are sold while
being abroad (BPM6, para. 10.17(g)). The specific identification of those goods in the statistical
recording of the customs transactions would be useful to BPM6 compilers.
290
C. Common metadata to be provided by IMTS and balance-of-payments compilers
24.19. Publication of a reconciliation table. It is a good practice for IMTS and BPM6 compilers
to provide, as part of their metadata, a reconciliation table between IMTS and total goods on a
balance-of-payments basis (see IMTS 2010, annex F, table F.1, as a possible example). It is
advised that this table be accompanied by appropriate metadata regarding the recording of the
relevant transactions.
24.20. Development of a reconciliation table: Cooperation towards adjusting balance-of-
payments statistics and foreign trade statistics in the Eurpean Union.243
On the initiative of
Eurostat, a Task Force on the reconciliation between Balance of Payments and Foreign Trade
Statistics (TF BoP/FTS) was set up consisting of representatives of European Union member
States in the areas of balance-of-payments statistics and foreign trade statistics. The task force
was established to meet the need for data delivered from foreign trade statistics to balance-of-
payment statistics to be conceptually adjusted. In light of this, one goal was the formulation of
so-called reconciliation tables which would enable all European Union member States to make
the necessary adjustments to foreign trade data to enable them to fit the system of balance-of-
payments statistics using European Union- consistent methods and practices(see box XXIV.3 for
details).
243
Description provided by Germany.
291
Box XXIV.3
Development of a reconciliation table in the European Union
The methodological and conceptual differences between the two systems in the area of cross-
border trade in goods were identified. In particular:
There was a comparison of the fundamental methodological approaches to foreign trade
statistics (recording all goods that add to or subtract from the stock of material resources of a
country by entering or leaving its economic territory) and to balance-of-payments statistics
(recording the change of ownership between residents and non-residents)
Any differences between the European Union concept and the national concept were
identified
Different valuation methods were identified (CIF/FOB or FOB/FOB), as well as methods for
calculating the conversion factors used to switch between both concepts
The methods for compiling data on processing trade, repairs and maintenance where
identified
There was an examination of the treatment of specific goods and movements (e.g., change in
economic ownership of vessels and aircraft).
Furthermore, specific compilation problems (e.g., impacts of changes in customs law) were
discussed. A model of the reconciliation table was developed by the Task Force.a
a The table is not provided in this Manual, since it is highly complex and aligned with the situation specific to the
European Union.
Part five. metadata and dissemination
295
Chapter XXV
Metadata
25.1. Introduction. The present chapter is based on IMTS 2010, chapter IX, on data quality and
metadata. It describes all the information on the trade data that should be considered metadata. It
explains that metadata are relevant for the correct understanding of the content, coverage and
limitations of the data, and provides guidance on the correct interpretation of the trade statistics.
Metadata exist at various levels of detail: at the overall level, metadata indicate the nature of the
coverage of the trade statistics, and how data are collected and processed; at the next levels,
information can be given on the main data variables, such as commodity classification, country
nomenclature and country coverage, or valuation, and on specific trade flows. This chapter
provides advice on and examples of how best to present and disseminate the metadata.
A. Basic concepts
25.2. Definition and role of metadata. Metadata are ―data about data‖ which enable and
facilitate sharing, querying, understanding and using statistical data over the different stages of
collection, compilation and dissemination, and at their various levels of aggregation (i.e., from
microdata to macrodata). They encompass administrative facts about the data (who has created
them and when), and definition of concepts applied, as well as description of how data were
collected and processed before they were disseminated or stored in a database (see IMTS, para.
9.20). Not only are metadata important for users, but they also play a crucial role in the statistical
production process, as common standards and definitions should be followed to the extent
possible throughout all statistical domains in order to facilitate the linking and integration of
statistical information.
25.3. Structural metadata. Structural metadata are identifiers and descriptors which are
essential for discovering, organizing, retrieving and processing statistical data sets.244
They can
be thought of as the ―labels‖ that need to be associated to each data item in order for it to have
any meaning at all. In the context of international merchandise trade statistics, structural
metadata include items such as unit of measurement, time period, commodity code, identification
of reporting and partner countries (country codes), identification of trade flow, etc. Structural
metadata also include the information required to link data points across periods in order to
obtain meaningful time series.
25.4. Reference metadata. Reference metadata are of a more general nature and ―may refer to
specific statistical data, to entire data collections or even to the institution that provides the
data‖.245
More specifically, in the context of international merchandise trade statistics, reference
metadata items include: (a) explanations of the concepts and definitions adopted and their
practical implementation (e.g., coverage and valuation); (b) details on the methodologies used
for the generation of the data (e.g., specification of data source(s), description of the sampling
framework in the context of survey-based data, description of data validation and editing
244
See Statistical Data and Metadata Exchange, ―SDMX content-oriented guidelines‖ (2009), annex 4, entitled
―Metadata common vocabulary‖.
245 Ibid., p.6
296
techniques, etc.); and (c) information describing the various quality dimensions of the resulting
international merchandise trade statistics (e.g., relevance, accuracy, timeliness, methodological
soundness, coherence and accessibility).246
25.5. Metadata and data quality. There is a bidirectional relationship between metadata and
data quality. On the one hand, metadata provide details on the various quality dimensions of
international merchandise trade statistics, as stated in the previous paragraph. On the other hand,
the availability of adequate metadata to users is in itself a quality component through its role as
an indicator of the accessibility of international merchandise trade statistics (see IMTS 2010,
paras. 9.17 and 9.21). Compilers should aim to provide users with all the metadata required to
understand both the strengths and the limitations of the international merchandise trade statistics
they produce, documenting in a timely manner all methodological aspects underlying the data
that are relevant for their proper use and interpretation (e.g., definitions, classifications, scope,
confidentiality issues, etc.).
25.6. Institutional arrangements for metadata compilation. To reduce the burden associated
with trade metadata projects, it is good practice for compilers to closely cooperate with the
specific units responsible for ensuring within the national statistical system that metadata are
produced, that they adhere to a standard format and that they are properly maintained and
updated.
B. Presentation and dissemination of metadata
25.7. Layered presentation of metadata. Compilers of international merchandise trade statistics
must make sufficient metadata available to enable both the least and the most sophisticated users
to readily assess data and their quality (see IMTS 2010, para. 9.22). It is good practice to
structure metadata in layers of incremental detail while providing clear links between high-level
and specific metadata concepts. Such a layered presentation allows the needs of diverse groups
of users, who may have different levels of statistical expertise, to be met.247
25.8. Presentation of structural and reference metadata. IMTS 2010 (para. 9.22 (b))
recommends that structural metadata be presented as an integral part of the international
merchandise trade statistics database in such a way as to be extractable together with any data
item and published as part of statistical tables. On the other hand, reference metadata could be
presented in the form of a detailed explanatory note describing the scope, coverage, and quality
of a data set and be made available electronically alongside the database or in special
publications (para.9.22 (a)).
25.9. Use of standardized metadata concepts. It is recommended that the dissemination of
metadata related to international merchandise trade statistics be carried out in compliance with
the approach adopted by a given country to metadata across all areas of economic statistics
(IMTS 2010, para. 9.25). Whenever feasible, therefore, it is good practice for compilers of
international merchandise trade statistics structure to present their metadata using standardized
246
Ibid., annex 4.
247 See OECD, Data and Metadata Reporting and Presentation Handbook (Paris, 2007), p. 22, para. 6.3.2.
297
concepts that are relevant across statistical domains (e.g., by adopting cross-domain concepts
derived from the SDMX framework or the OECD Glossary of Statistical Terms). The aim should
be to promote harmonization of statistical information and its related high-level metadata across
various institutions and statistical domains, even if some specific metadata concepts are not
applicable or are organized differently in different domains or institutions.
25.10. Linking data and metadata. As metadata are generated and processed during every step
of the compilation process, there is a strong need for a metadata management system to ensure
that the appropriate metadata retain their links with data. IMTS 2010 recommends that metadata
dissemination be an integral part of the dissemination of international merchandise trade
statistics (IMTS 2010, para. 9.25). A good practice in this regard is to actively link metadata to
the statistical data they describe, and vice versa,248
by implementing metadata-driven systems
and management systems for metadata throughout the various stages of the statistical production
process. There are several information model specifications that can contribute to achieving this
goal (most notably SDMX and DDI249
). While such specifications are designed to enable
performance of different functions, they can be used together in the same system, or complement
each other, in the compilation and exchange of data and metadata.250
25.11. Metadata registries. A metadata registry is a central repository (usually a database itself)
with information that allows linking the detailed definitions (semantics) and the codes
(representations) of the metadata items used to describe a particular statistical data set. The Euro-
SDMX registry is an example of a metadata registry (which implements the SDMX registry
specifications)251
. It is good practice for compilers of international merchandise trade statistics to
put special emphasis on the development, maintenance and dissemination of metadata registries
at the national and international levels in order to improve the harmonization, standardization,
use, reuse and interchange of their metadata.252
25.12. Access to metadata. Compilers of international merchandise trade statistics should make
every effort to ensure that users have ready access to metadata through multiple dissemination
channels, both in printed and in electronic format (whereby Internet dissemination plays a key
role). As a general rule, as metadata is considered as having a high public good component, their
on-line dissemination should be free of charge, regardless of whether the international
merchandise trade statistics they describe are disseminated for a fee according to the compiling
organization‘s policies.253
248
Ibid.
249 The Data Documentation Initiative (DDI) is an effort to create an international standard for describing data from
the social, behavioural, and economic sciences.
250 See, e.g., A. Gregory, P. Heus and J. Ryssevik, ―Metadata‖, Working Paper No. 57 (German Council for Social
and Economic Data (RatSWD), March 2009).
251 See par. 9.32 on the Euro-SDMX Metadata Structure (ESMs). Eurostat‘s Metadata Server (RAMON) is available
at http://ec.europa.eu/eurostat/ramon/index.cfm?TargetUrl=DSP_PUB_WELC .
252 The International Organization for Standardization / International Electrotechnical (ISO/IEC) International
Standard 11179-1 provides a more general discussion of metadata registries.
253 See OECD, Data and Metadata Reporting and Presentation Handbook, p. 22.
298
C. Metadata items relevant for international merchandise trade statistics
25.13. Structural metadata items for international merchandise trade statistics. The following
are typical structural metadata items that belong to the trade values and quantities in each
international merchandise trade statistics dataset (see IMTS 2010, para. 9.23):
(a) Reporting country: identification of the country that reported the given data set;
(b) Reference period: identification of the specific month, quarter, year, etc.;
(c) Trade flow: whether the data refer to exports, imports, re-exports, etc.;
(d) Commodity code: identification of the commodity or commodity group;
(e) Commodity description: stand-alone descriptors of the commodity codes at any level of
aggregation;254
(f) Commodity classification: name of the classification used to report the data (e.g.,
HS2007, SITC Rev. 4, national classification, etc.);
(g) Partner country or region: identification of the partner country or region;
(h) Country or region classification (e.g., alpha-2 or alpha-3 ISO country codes; United
Nations standard country or area codes for statistical use,255
etc.), including information on the
country-composition of geographical regions;
(i) Currency unit: identification of the currency unit (e.g., national currency, United States
dollars, etc.) in which trade values are expressed;
(j) Mode of transport;
(k) Weight unit: identification of the weight unit in which trade quantity data (net weight
data) are expressed;
(l) Supplementary quantity unit: identification of the unit of measurement, by HS code, in
which supplementary trade quantity data are expressed;
(m) Valuation: identification of whether trade values are expressed in FOB or CIF terms;
(n) Custom procedure code (or applicable transaction code).
25.14. Reference metadata items for international merchandise trade statistics. The following
items are typically part of the reference metadata associated with international merchandise trade
statistics (see IMTS 2010, para. 9.23):
(a) Legal framework and institutional arrangements (e.g., references to relevant laws and
regulations, role of all institutions involved in compilation, etc.);
254
The Harmonized System (HS) often does not provide stand-alone descriptors of individual commodity codes, as
the titles of the HS headings and subheadings often do not describe their scope (inasmuch as they use, e.g., such
titles as ―others‖), and/or refer to other headings and subheadings as well as to sections, chapters or headings notes.
While not as precise as the legal text, standalone descriptors provide an easily accessible and concise indication of
the scope of the HS codes.
255 Available from http://unstats.un.org/unsd/methods/m49/m49.htm.
299
(b) Underlying concepts and definitions (e.g., definition of statistical territory and trade
system used, definition of statistical value, scope of international merchandise trade statistic and
their relationship to national accounts and balance-of-payments statistics, etc.);
(c) Description of data sources used and methodology of data integration (e.g., customs
declarations and related customs records, non-customs administrative sources, enterprise
surveys, and a brief description of how data obtained from these sources are merged to create an
integrated data set);
(d) Description of data-collection and data-processing procedures (e.g., frequency of data
collection, description of specific procedures used for data collection, validation, editing,
aggregation, etc.);
(e) Estimation methods (e.g., estimation of value of trade below customs and statistical
thresholds, CIF-FOB adjustments, estimation of quantities, etc.);
(f) Dissemination policy (e.g., release and revision schedules);
(g) Additional explanations and footnotes concerning the data, as required (e.g., explanatory
notes on revisions, breaks in series, application of confidentiality rules, treatment of special
categories of goods, etc.);
(h) Quality reporting.
D. Country practices
25.15. Example from the United States of America. Metadata on the international merchandise
trade statistics of the United States is made available online at the United States Bureau of the
Census website in a Guide to Foreign Trade Statistics.256
This resource provides a detailed
description of the United States Foreign Trade Statistical Program, and includes information on
the legal framework (―Authority‖), data sources, concepts and definitions (e.g., commodity
classifications, coverage, valuation, quantity measurement, date of recording, etc.), data-
processing procedures (e.g., seasonal adjustment, constant dollar adjustment), estimation
methods for low-valued statistics, quality reporting (e.g., non-sampling errors, comparability
issues, etc.), and data revision policies. This metadata dissemination resource also includes
contact information and other sources of information about the United States Foreign Trade
Statistics Program.
25.16. Example from Italy. At ISTAT, the main foreign trade statistics dissemination tool is the
web-based system Coeweb which allows free of charge downloads and contains a wide range of
standardized and customized statistical tables and a special section for metadata. In particular,
great efforts are made to improve accessibility of metadata by enriching the sections devoted to
users‘ support in respect of issues like commodity and geographical classifications (including
correlation tables which are updated yearly), methodologies related to specific issues (such as
electricity and gas) and documentation on regulations and national law. The version in English is
available for many issues. Methodological warnings are presented in dynamic footnotes to
downloadable tables (about 5,000 notes) presenting users with possible caveats in respect of the
256
See www.census.gov/foreign-trade/guide/sec2.html
300
interpretation of data and inviting them to access more in-depth information at the specific
metadata section.
25.17. Example from Brazil. Metadata pertaining to Brazil‘s international merchandise trade
statistics are available in Portuguese, English and Spanish through the online AliceWeb2 system
(http://aliceweb2.mdic.gov.br/). Concepts and definitions in respect of the main variables are
given directly below:
(a) Export: corresponds to a good shipped to the outside, without return;
(b) Import: corresponds to the entry of a good originating from outside, without return;
(c) Commodity: for the purpose of the classification of goods, Brazil has, since 1996, used
the common classification of Mercosur (NCM), which is also used by other countries of the
block (Argentina, Paraguay and Uruguay), which is based on the Harmonized Commodity
Description and Coding System;
(d) Country of destination (for exports): for the purpose of dissemination of export statistics,
the country of destination is the last country known at the time of the exportation, to which goods
are to be delivered, irrespective of where they have been initially dispatched to and whether or
not, on their way to the last country, they are subject to any commercial transactions or other
operations that change their legal status;
(e) Country of origin (for imports): for the purpose of disseminating statistics on imports, the
country of origin is the country where the agricultural products were grown, the minerals
extracted or the manufactured goods produced in whole or in part. In the case of manufactured
goods, the country of origin is where the last phase of processing was completed and the product
adopted its final form (a concept defined by the Kyoto Convention );
(f) Economic bloc: the countries are grouped by economic blocks following the formation of
geo-economic regions and international agreements. A country may be part of more than one
economic bloc;
(g) State (unit of the federation): for the purpose of disseminating statistics on exports, the
State is the unit of the Federation where agricultural products were grown, minerals were
extracted or manufactured goods were produced in whole or in part. In the case of manufactures,
―State‖ is the State that has completed the last stage of the manufacturing process in which the
product takes its final form (concept of origin). In the case of imports, ―State‖ is defined as the
State of the tax residence of the importer;
(h) Mode of transport: in the case of exports, this refers to the means of transportation used
from the last place from which the goods are shipped abroad. In the case of imports, it refers to
the means of transportation used at the first point of entry of goods into national territory. In
accordance with the framework of the Mercosur countries, Brazil records the following modes of
transport: sea, river, lake, air, postal consignments, mail or courier shipments, railway, road,
pipelines, transmission line (cables) and self-propelled goods;
(i) Port: for exports, this refers to the port or airport where the shipment of goods takes
place, or the last place from which the good leaves the country. In the case of imports, it is the
port or airport where the goods are unloaded or the first place at which the goods enter the
country.
301
Box XXV.1
Towards the implementation of SDMX and DDI for IMTS: Experience of Mexico
The SDMX standard is designed for exchanging statistical data and metadata between two or
more partners. Of particularly interest is the fact that in Mexico, which is a federal country,
SDMX can support both a national information sharing system and its links to other information
sharing systems at the international level. Following the decision to adopt the SDMX standard,
the Mexico‘s National Institute of Statistics and Geography (INEGI) started developing the
infrastructure required to make data and structural metadata available through web services.
Tools developed by Eurostat as well as the support of OECD have been of great help in the
accomplishment of this task.
The data (and related metadata) for a given statistical domain are structured in SDMX
according to a Data structure definition (DSD), which describes the structure of a particular
statistical data flow through a list of dimensions and a list of attributes (and their associated
codes).
Mexico is working on the adoption of SDMX technology in statistical projects in various
statistical domains. However, in January 2011, INEGI decided, in partnership with OECD‘s
Statistics Directorate, to give priority to the conversion of the ―annual trade by commodity‖ data
flow to SDMX. By the beginning of 2012, this data flow was released by INEGI for testing
purposes in a web service, and it is expected that feedback will be received from OECD. The
data structure definition for this data flow will include dimensions such as frequency, reference
country, trade flow (exports, imports, etc.), commodity code (from the HS2007 classification),
valuation (in FOB or CIF terms), partner country or region, and reference period. It will include
attributes like unit of measurement and observation status.
The issue of metadata is also covered in Mexico through the implementation of the Data
Documentation Initiative (DDI) as a fundamental tool for the integration of metadata for
international merchandise trade statistics. The project is carried out with the support and advice
of the World Bank. The policy of INEGI is to use both standards as linchpins for the metadata of
the national statistical projects, thus strengthening the national system of statistical and
geographical information.
Chapter XXVI
Dissemination
26.1. Introduction. The present chapter is based on chapter X, on dissemination, of
IMTS 2010. It describes the factors to be taken into consideration when establishing the
dissemination policy for international merchandise trade statistics at the responsible national
agency. These factors include: variables to be made available; timeliness; coherence between
disseminated data sets; statistical confidentiality; revision policy; users needs; formats and means
of dissemination; and dissemination of metadata and information on data quality. The last section
of the chapter addresses issues related to the dissemination of statistics on international trade in
goods combined with the dissemination of statistics on international trade in services.
A. Role of data and metadata dissemination
26.2. Importance of dissemination. The availability of official statistics in general and statistics
of international merchandise trade in particular is one of the cornerstones of public confidence in
good government, as such statistics can inform debate and decision-making both by
Governments and by the wider community. In this context, IMTS 2010 highlights the importance
of countries‘ adherence to the United Nations Fundamental Principles of Official Statistics 257
which state, inter alia, that:
(a) Official statistics ―provide an indispensable element in the information system of a
democratic society, serving the Government, the economy and the public‖;
(b) These statistics should be ―made available on an impartial basis by official statistical
agencies to honour citizens' entitlement to public information‖;
(c) The statistical agencies should ―facilitate a correct interpretation of the data‖ and
therefore have ―to present information according to scientific standards on the sources, methods
and procedures of the statistics‖;
(d) The statistical agencies ―are entitled to comment on erroneous interpretation and misuse
of statistics‖.
26.3. In the light of these Principles, the dissemination of trade data and metadata is an integral
part of the national programme of trade statistics and should be carried out with great care and
attention to the needs of users, while at the same time ensuring adequate confidentiality of data
providers.
B. Factors to consider in data and metadata dissemination
26.4. Compilers of international merchandise trade statistics are advised to consider the
following factors in designing and implementing data and metadata dissemination strategies.
Each of these factors will be subsequently discussed:
(a) Variables to be made available;
(b) Timeliness of data and metadata dissemination;
(c) Coherence between disseminated data sets;
(d) Statistical confidentiality;
257
The Principles are available at http://unstats.un.org/unsd/methods/statorg/FP-English.htm
304
(e) Revision policy;
(f) Groups of users and their specific needs;
(g) Formats and means of dissemination.
1. Variables to be made available
26.5. Minimum set of data and structural metadata items to be disseminated. IMTS 2010
provides certain recommendations and encouragements in respect of what kinds of data and
structural metadata items should be disseminated. They can be summarized as follows: countries
should release international merchandise trade statistics for four trade flows (exports, re-exports,
imports and reimports), detailed by six-digit HS codes and by categories of goods recommended
for separate identification, with respect to each trading partner, using appropriate criteria for
partner attribution, in terms of applicable statistical value and quantity units and by mode of
transport. Table XXVI.1 lists a suggested set of data and structural metadata items to be
disseminated, as well as their possible values.
Table XXVI.1
Set of possible data and structural metadata items to be disseminated
Variables Possible values
Reference period E.g., identification of year for annual data, identification
of year and month for monthly data, etc.
Trade flow Exports, re-exports, imports, or reimports
Commodity or
commodity aggregate
Six-digit HS commodity code, four-digit HS heading, HS
Chapter, etc.
Commodity
classification
E.g., HS 2012, HS 2007, etc.
Country of last known
destination (for
exports)
E.g., ISO alpha-3 country code
Country of origin (for
imports)
E.g., ISO alpha-3 country code
Country of
consignment (both for
exports and imports)
E.g., ISO alpha-3 country code
Mode of transport E.g., air, water, land and their subdivisions
FOB value Monetary value
CIF value Monetary value
Currency unit E.g., national currency, United States dollars, etc.
Quantity (net weight) Physical quantity (in kilograms)
Supplementary quantity Physical quantity (in supplementary unit of measurement)
Supplementary unit of
measurement
E.g., liters, etc.
305
Custom procedure code
(or applicable
transaction code)a
Code of the customs procedure applied to individual
transactions by customs; any applied procedure or
transaction code if customs procedure codes are not
available or if additional codes are used a This information is requested to obtain additional information about trade transactions for
statistical purposes such as on re-exports, reimports, goods for processing and intra-firm trade.
However, national practices in the use of customs procedures vary considerably and it might not
always be possible to derive the desired information.
26.6. Dissemination of new items recommended or encouraged by IMTS 2010. It is good
practice to disseminate newly recommended and encouraged data items (e.g., imports valued
FOB, in addition to imports valued CIF) in such a way as not to confuse users. Table XXVI.2
presents dissemination requirements for aggregate trade flows by partner country and mode of
transport, while Table XXVI.3 presents requirements for detailed trade data in accordance with
IMTS 2010 recommendations (R) and encouragements (E).
Table XXVI.2
Dissemination matrix: aggregate data and structural metadata
Trade
flow
Ref
eren
ce p
erio
d
Countr
y o
f la
st k
now
n
des
tinat
ion
Countr
y o
f ori
gin
Countr
y o
f
consi
gnm
ent
Mode
of
tran
sport
Val
ue,
FO
B
Val
ue,
CIF
Curr
ency
Exports R R E R R R
Re-exports R R E R R R
Imports R R R R E R R
Reimports R R R R E R R
306
Table XXVI.3
Dissemination matrix: detailed data and structural metadata
Trade
flow
Ref
eren
ce p
erio
d
Com
modit
y c
ode
Countr
y o
f la
st k
now
n
des
tinat
ion
Countr
y o
f ori
gin
Countr
y o
f
consi
gnm
ent
Mode
of
tran
sport
Val
ue,
FO
B
Val
ue,
CIF
Curr
ency
Quan
tity
(net
wei
ght)
Supple
men
tary
quan
tity
Supple
men
tary
quan
tity
unit
Cust
om
s pro
cedure
code
Exports R R R E R R R R R R E
Re-exports R R R E R R R R R R E
Imports R R R R R E R R R R R E
Reimports R R R R R E R R R R R E
2. Timeliness
26.7. Timeliness of first data releases. Timeliness is defined in IMTS 2010 (para. 10.7) as the
length of time between an event (the end of the reference period) and the availability of statistical
information about this event. IMTS 2010 encourages countries to issue the first releases of data
as follows: (a) monthly totals of exports and imports within 45 days after the end of the reference
month, at least by major trading partners and basic commodity breakdown; (b) quarterly data
within 60 days after the end of the reference quarter; (c) annual data within 90 days after the end
of the reference year.
26.8. Advance release calendar. IMTS 2010 (para. 10.5) further recommends (a) that countries
announce in advance the precise dates at which those statistics will be released and revised and
(b) that this advance release calendar is posted before the beginning of each year on the website
of the national agency responsible for the dissemination of the official trade statistics. While
implementing those recommendations and encouragements, it is good practice to make clear the
dates on which the provisional estimates and the final data (no longer subject to regular revision)
will become available. Also, it is good practice to inform users about availability of such
calendars using all appropriate means of communication.
26.9. Dealing with the trade-off between timeliness and reliability and accuracy. In producing
data, there is usually a trade-off between the timeliness, on the one hand, and the reliability,
accuracy and level of detail of the published data, on the other hand. Recognizing this trade-off,
IMTS 2010 (paras. 10.5-10.6) encourages countries, while making relevant decisions, to take
into consideration a number of factors such as user requirements, timing of the collection of
initial data by the customs administrations and other source agencies, extent and timing of data
revisions of the major data sources, and modes of data dissemination. It is good practice to
discuss this trade-off explicitly with major user groups, in order that an understanding may be
reached on the best solution, and to make this understanding publicly available.
307
26.10. Early dissemination of provisional estimates. To improve timeliness in the dissemination
of international merchandise trade statistics, it good practice to publish, on a regular basis, the
provisional estimates of total exports and imports, as well as of trade by major commodities and
partners, soon after the end of the reference period (see above). Such estimates, by their very
nature, would be based on relatively limited data content and replaced at a later date by more
accurate, but less timely figures. However, compilers and users must be aware of the trade-off
between quality (size of revisions) and timeliness (e.g., it is generally not a good practice to
frequently publish large revisions (IMTS 2010, paras. 10.10-10.12)). Quality aspects need to be
taken into account when deciding on the frequency of publication.
3. Coherence between disseminated data sets
26.11. Coherence of monthly, quarterly and annual data. Many countries use additional
information for the compilation of annual trade statistics. In this connection, IMTS 2010 (para.
10.9) stresses that the data for the fourth quarter (or for the twelfth month) need to be compiled
and disseminated in their own right and should not be derived as the difference between the
annual totals and the sum for the first three quarters (or 11 months) in order to provide
undistorted data for all months and quarters. It is good practice to provide in the reference
metadata an appropriate explanation in this respect, so as to assist users in the correct
interpretation and use of the data. It is also good practice to make users aware of particularly
significant cases of non-additivity over time, and to provide the reasons for their existence.
4. Statistical confidentiality
26.12. Statistical confidentiality versus user needs. Statistical confidentiality refers to the
protection of information of individual statistical units and should be distinguished from other
forms of confidentiality under which information is not disseminated based on considerations
such as national security concerns. It is good practice for compilers of international merchandise
trade statistics to always strive for a full coverage of all trade transactions that are within the
scope of IMTS while applying appropriate methods to keep certain information confidential.
IMTS 2010 (para. 10.2) recognizes the need both for statistical confidentiality and for balancing
it against the demand for public information in cases where the application of statistical
confidentiality would limit or make it impossible to provide sufficient or meaningful
information. It is also good practice to disseminate, along with the data, a quantitative indicator
of the quantity of goods subject to confidentiality.
26.13. Development and implementation of confidentiality rules. IMTS 2010 (para. 10.3)
recommends that passive confidentiality be applied as much as possible, i.e., that data be treated
as confidential only at the trader‘s request and when the statistical authority finds the request
justified based on the confidentiality rules, unless the use of active confidentiality is already the
established, desired and accepted practice. It is further recommended that in suppressing data due
to confidentiality, any information deemed confidential (suppressed) be reported in full detail at
the next higher level of commodity and/ or partner aggregation that adequately protects
confidentiality. However, the implementation of these recommendations on statistical
confidentiality also depends to a large extent on each country‘s legislation and the general
confidentiality policy adopted by its statistical system. An important challenge in the
308
implementation of confidentiality rules is to ensure that confidentiality is applied across all the
different classifications in which data are disseminated while preserving the goal of maximizing
information. An example of good practices in the development and implementation of
confidentiality rules is provided in box XXVI.1.
Box XXVI.1
Treatment of confidentiality in Germany
Passive confidentiality in foreign trade statistics is regulated by European law.a
Importers
and exporters submitting Intrastat/customs declarations in Germany can submit a request for
confidentiality, at which point the Federal Statistical Office examines whether the application of
confidentiality is justified or not. Two criteria are relevant for establishing confidentiality: the
maximum number of parties responsible for providing the information (traders, importers or
exporters) and the so-called ―p% rule‖. The first criterion is applicable if there are three or more
providers of statistical information (PSI) involved. The p% rule involves calculating the
difference between total value and the second largest value: if the difference exceeds the largest
value by less than p%, then one PSI is dominating; the value of p% is determined by the Federal
Statistical Office.
The request for confidentiality is granted if the above criteria are met in a majority of the 12
preceding reporting months. In cases of doubt, the decision is always made in favour of
confidentiality.
―Primary confidentiality‖ is implemented both by partner countries (with the result that
specific or all countries are suppressed, flagged as confidential and summed up under the
position ―confidential countries‖) and by commodity codes (with the result that specific codes
are suppressed, flagged as confidential and summed up under a specific code number within
chapter 99).
Each confidential commodity code (or partner country) needs a counterpart (―secondary
confidentiality‖). Otherwise, confidential values could be recalculated through the results in
higher commodity levels or the results in other classifications (e.g., SITC). The aim is in finding
a suitable counterpart is to protect data with a minimum loss of information. It is desirable to find
a nearby counterpart to a confidential commodity code. The next step is to determine whether the
counterpart commodity code also ensures that confidentiality is maintained throughout all other
classifications used in foreign trade statistics (e.g., SITC, CPA).
Confidentiality of data is always granted for the current and the following years. After
expiration of this term, companies have to submit a new application. Otherwise, the data are
published again. Data once marked as confidential are kept confidential forever.
Data on exports and imports of military arms are generally kept confidential. a See Regulation (EC) No. 471/2009 of the European Parliament and of the Council of 6 May 2009, article 10, and
Regulation (EC) No. 638/2004 of the European Parliament and of the Council of 31 March 2004, article 11.
309
Box XVI.2
Disclosure control in Canada
Statistics Canada is prohibited by law from releasing any data that would divulge information
obtained under the Statistics Act that relates to any identifiable person, business or organization
without the prior knowledge or the consent in writing of that person, business or organization.
Various confidentiality rules are applied to all data that are released or published so as to prevent
the publication or disclosure of any information deemed confidential. If necessary, data are
suppressed to prevent direct or residual disclosure of identifiable information.
26.14. Informing about confidentiality rules. It is good practice for all countries to develop and
publish an overview of their confidentiality rules with respect to international merchandise trade
data in order that data reporters may be assured that their right to confidentiality is guaranteed,
while data users may be informed about certain data limitations, thereby enabling them to use the
data more appropriately. It is also good practice to provide users with details on what part of the
data are affected most by the application of confidentiality rules and on the magnitude of this
effect.
5. Revision policy
26.15. Features of a good revision policy. Recognizing that data revisions are an essential part
of country practices, IMTS 2010 (paras. 10.10–10.11) encourages countries to develop a revision
policy that is well designed, carefully managed, transparent and well coordinated with other
areas of statistics and hence allows users to cope with revisions in a systematic manner. The
following are some good practices in relation to the revision policy (see IMTS 2010, para.
10.12):
(a) Availability of a detailed description of the revision policy on the responsible agency‘s
website;
(b) Reasonable stability of timing of the revisions from year to year;
(c) Predetermined timing of revisions (clearly reflected in the data release calendar);
(d) Prior notification to users whenever a revision requires changes in the time series going
as far back as the beginning of the series to retain methodological consistency, explanation for
the reasons for the revision and provision of information on its possible impact on the data;
(e) Easy access to sufficiently long time-series of revised data;
(f) Dissemination of all revised monthly, quarterly and annual data so as to ensure
consistency of all data available to users, including seasonally adjusted data and indices;
(g) Adequate documentation of revisions in the statistical publications and databases;
(h) Coordination of the revision policy with non-customs data providers, which might be the
origin of large revisions;
(i) Establishment of a vintage database to measure the size of revisions and generate quality
indicators.
26.16. Country experiences in setting up and implementing a good revision policy are described
in box XXVI.3 and in box XXVI.4.
310
Box XXVI.3
Revision policy of the Philippines
The figures for the previous month are revised to include documents that were submitted late and
were not included before the cut-off date, i.e., for exports 10 days after the reference month and
for imports 25 days after the reference month. The revised monthly figures are reflected in the
next month‘s press release.
Processing, cleaning, and updating of data files to produce final tabulations are carried out
for exports 5 to 7 days after the press release date, and for imports 5 to 10 days after the press
release date.
Revisions are also due to:
(a) Consistency between FOB values and volume, both in gross weight in kilos and
quantity.
(b) Validation of values to ensure credibility and accuracy of the final figures.
(c) Adjustments due to scope and coverage.
311
Box XXVI.4
Revision policy of Canada
In general, merchandise trade data are revised on an ongoing basis for each month of the current
year. Current-year revisions are reflected in both the customs- and BOP-based data. The previous
year's customs data are revised with the release of the data for the January and February
reference months as well as on a quarterly basis. The previous two years of customs-based data
are revised annually and released in February with the data for the December reference month.
The previous year's BOP-based data are revised with the release of the January, February and
March reference months. Revisions to BOP-based data for the previous three years are released
annually in June with the data for the April reference month. Factors influencing revisions
include late receipt of import and export documentation, incorrect information on customs forms,
replacement of estimates produced for the energy sector with actual figures, changes in
classification of merchandise based on more current information, and changes to seasonal
adjustment factors.
6. Users
26.17. Diversity of user groups and needs. A key to the usefulness of trade statistics is its broad
dissemination. Trade statistics are compiled to serve the needs of many users, including
Governments, the business community, the mass media, non-governmental organizations
(NGOs), compilers of other economic statistics such as balance of payments and national
accounts, various regional, supranational and international organizations, researchers and the
public at large. The uses of trade data are numerous and range from the development of national,
regional and international trade and general economic policies to market analysis, determination
of the economic characteristics of traders, infrastructure planning and provision of input into the
system of national accounts and balance-of-payments statistics.
26.18. Equal treatment of users. IMTS 2010 (para. 10.13) recommends that all users be treated
equally and that data be disseminated without preference to any national or international user
group. To ensure that such treatment is upheld, it is good practice to make all kinds of trade data
available to all users at the same predetermined time.
26.19. Monitoring of data needs of users. It is good practice to systematically monitor changing
user needs in order to ensure the relevance of the compiled data and their adequate
dissemination. Such monitoring, as well as subsequent actions taken, should be part of inter-
agency cooperation efforts within the established institutional arrangements. It is good practice
to establish close and long-term relationships with representatives of major user groups in order
to identify user needs and the most effective means of disseminating data and metadata. This
might be achieved through standing advisory committees as well as ad hoc promotional events.
National and world statistics days can be celebrated in this connection.
26.20. Surveys of user satisfaction regarding data dissemination. In order to ensure the most
effective dissemination, it is good practice to conduct user satisfaction surveys. Such surveys
might identify user groups that might need to be given more attention, owing to a lack of certain
technical means of accessing data, or more detailed explanations with respect to using the data
properly. A user satisfaction survey focus on the following aspects of data dissemination:
312
(a) User-friendliness of the trade statistics database interface;
(b) Clarity and completeness of available metadata;
(c) Desirability of continued issuance of traditional paper publications;
(d) Means of improving data and metadata presentation.
26.21. Outreach activities. It is good practice to conduct regular outreach activities aimed at
helping users to better understand data and put them to the most effective use, including efforts
to improve the statistical literacy of users and to prevent misinterpretation, for example, within
the context of a broad public relations strategy designed to deepen the general public‘s
understanding of the importance of statistics. The following outreach activities can be
encouraged: conduct of seminars focused on specific user groups; provision of tutorials and user
guides explaining how to find data on the dissemination website; organization of press
conferences and including contact information in press releases to assist users in the correct
interpretation of the statistics; enabling user groups to participate in annual conferences, book
fairs and other suitable events; and launching of awareness campaigns, e.g., a ―national statistics
day/week/month‖.
26.22. User support to ensure correct interpretation of data. While statistics can be used
acceptably and interpreted in many different ways, it is important to maintain trust in, and the
credibility of, official trade statistics. Hence, it is good practice for the responsible statistical
agency to prevent obviously erroneous interpretation of the data, and to undertake the necessary
corrective actions if such faulty interpretations are detected (for instance, by conducting press
conferences, providing press releases and writing letters to the editors of publications where
misinterpretations have been detected). One good practice for preventing misinterpretation of
data is to give special attention to establishing direct contacts with other government agencies,
international organizations and universities, as these are users of foreign trade statistics whose
analyses have a major impact on public policy and public opinion.
7. Formats and means of dissemination
26.23. Use of different means of dissemination. Both data and metadata can be disseminated in
various formats and by various means. IMTS 2010 (para. 10.13) recommends that countries
choose the dissemination format and means of dissemination that best suits their users‘ needs. In
view of the diversity of user groups it is good practice to adopt several formats and means of
dissemination to ensure that data and metadata are effectively delivered. For example, press
releases of international merchandise trade statistics aimed at the general public have to be
disseminated in ways that facilitate re-dissemination by mass media, while more comprehensive
or detailed statistics intended for researchers need to be disseminated through online databases,
with hard-copy publications used as reference material.
26.24. Redesigning paper publications. It is good practice to periodically redesign paper
publications in order to make use of innovative means of data and metadata presentation and
better reflect user demands. In this connection, countries are advised that it is no longer
necessary to issue paper publications in an old fashioned way containing a set of tables or
providing very detailed data on trade in respect of particular commodity groups and partners. A
313
better practice is to focus such publications on the main features of a country‘s external trade,
and present data in a more user-friendly way by resorting to enhanced visual elements, such as
color charts and by adding more analytical information.
26.25. Central role of electronic databases. IMTS 2010 (para. 10.13) recommends that the
official country trade statistics be made available to users through the electronic databases
maintained by the responsible agency (see box XXVI.5 for the experience of Brazil). It is good
practice to ensure that such databases:
(a) Allow free and equal access to all users to any data record considered part of official
trade statistics;
(b) Contain an extensive metadata and knowledge base;
(c) Allow users to query the entire database through a user-friendly interface, and to
download query results in the commonly used electronic data formats (such as comma-delimited
text files), thereby reducing the need for personalized handling of most data requests and greatly
enhancing the efficiency of data dissemination;
Box XXVI.5
The central role of electronic databases for data dissemination: the case of Brazil
The System of Analysis of Foreign Trade Information, AliceWeb2,a is the most important
means of disseminating Brazil‘s foreign trade statistics. It was released in 2001 with the aim of
modernizing the means of access to and the systematic dissemination of statistical data on
Brazil‘s exports and imports. In August 2011, the Secretariat of Foreign Trade in the Ministry of
Development, Industry and Foreign Trade (MDIC/SECEX) updated the system, incorporating
advances in information technology and the experience gained in the 10 years following its
launch, and also adding additional variables and periods. Access is free after registration. There
are currently over 200,000 registered users from 144 countries. The system is available in
English, Portuguese and Spanish.
AliceWeb2 disseminates detailed information on Brazil‘s international merchandise trade up
to the eight-digit level of the Mercosur Common Nomenclature (NCM) by partner country and
economic bloc, by State and municipality, port of loading and unloading, and mode of transport.
It provides the trade balance by any of the variables on a monthly basis, and according to the
desired periods. The system also enables the generation of files for download in Excel and ASCII
format (txt structured) and allows automatic transmission to an email account. The data, which
are updated monthly, are obtained from the Integrated Foreign Trade System (SISCOMEX),
which manages Brazil‘s foreign trade. Data are available as of January 1989 (there are about
three terabytes of data), either by month or accumulated.
Trade information is expressed in United States dollars in terms of FOB (free on board) and
net kilogram. When the search includes a commodity, quantity and average prices are also
provided. The following information is available, both for exports and for imports:
Goods at all levels of the Harmonized System (two-, four-, six- or eight-digit level of the
NCM)
Countries of destination or origin
Economic blocks of destination or origin
314
Member State producers and importers
Municipalities exporters and importers
Ports of loading and unloading
Mode of transport
Others system features are:
Auto-fill function in the search for commodity codes
Up to six concurrent periods of monthly and/or accumulated data
Basket products: selection of several NCM, simultaneously
General total: monthly series of one or more variables combined
Trade Balance: monthly export and import trade by variable
Auxiliary tables: all codes/names of the variables used in the system
Further information is available by contacting [email protected].
a See http://aliceweb2.mdic.gov.br
26.26. Use of social media. It is also good practice to use social media as an additional tool with
which to reach trade statistics users, in particular journalists.
26.27. Special data requests. Regular data dissemination should satisfy most, if not all, user
needs. However, some users might have special needs which would require highly complex data
extraction, which they themselves might not be able to perform. It is a good practice to offer
such users premium data extraction services on a fee basis. Countries should ensure that users
are made fully aware of all available options for obtaining the required data.
8. Dissemination of metadata and information on data quality
26.28. Metadata requirements. The provision of adequate metadata and quality reports on
international merchandise trade statistics are as important as the provision of the statistical data
itself. IMTS 2010 (para. 9.22-9.25) takes into account a broad spectrum of metadata
requirements and recognizes that different levels of detail of metadata can be considered by
countries for dissemination. In this context, IMTS 2010 (para. 9.22) recommends as a minimum
the segmentation of metadata into two levels (reference and structural metadata) and developing
appropriate means of their dissemination. It should be recalled that reference metadata are
intended for the detailed description of the scope, coverage and quality of data and can be
presented separately from data, while structural metadata items are an integral part of the
statistics database and should be extractable together with any given data item (see chap. XXV).
26.29. Providing reference and structural metadata. It is good practice to make reference
metadata available to users in a separate document posted on the website of the responsible
agency and linked to the data query window, so that users can be immediately informed about
the existence and importance of such metadata. Reference metadata can be made available in a
separate paper publication as well and used in various outreach activities. It is important that
reference metadata be compiled following the recommendations contained in IMTS 2010 (para.
9.23). With respect to structural metadata, it is good practice for data query options to include all
relevant metadata variables and for those variables to be extracted by default unless explicitly
315
―unclicked‖ by the user (e.g., quantity data should be extracted together with the respective
quantity unit).
26.30. Raising awareness. Users often do not notice or use the available metadata and additional
efforts are required to raise their awareness. It is good practice to include explanations of the
importance of metadata for the correct interpretation of data and of the effective use of the data
in all relevant outreach activities. Even if metadata goes unused, the very fact that they are
compiled and made available is reassuring to those who wish to see high standards of credibility
upheld.
26.31. Dissemination of trade data to international, supranational and regional organizations.
IMTS 2010 (para. 10.15) encourages countries to cooperate with the international, supranational
and regional organizations in identifying and applying the most efficient means of dissemination
of their trade statistics and related metadata. It is good practice in this regard to review the
Statistical Data and Metadata Exchange (SDMX)258
format for possible use in the exchange and
sharing of their data.259
C. Combined presentation of statistics on external trade in goods and services
26.32. Need for appropriate metadata and guidance for interpreting combined trade data. Users
expect that trade statistics will cover trade in both goods and services and be presented to them
as a coherent data set. To meet this user expectation, it is good practice for IMTS compilers, in
addition to making the IMTS data available in their own right, to closely cooperate with
compilers of international trade in services in order to develop a policy of presenting (some) data
on merchandise trade and trade in services alongside each other. This combined presentation
should be accompanied with appropriate explanations regarding the scope and conceptual
overlaps of the data and include a numerical assessments of such overlaps. It is good practice to
provide guidance, including examples, on how data can (and cannot) be used.
26.33. Trade data and BOP data. Trade data on a BOP basis is important for the presentation of
an overall picture of trade flows, as it shows data on the trade in goods and data on the trade in
services on the same conceptual basis. However, such data do not provide the level of detail
needed for an in-depth analysis of international trade, as it is lacking, for example, partner and
product breakdown.
258
The SDMX technical standards and content-oriented guidelines can provide common formats and nomenclatures
for exchange and sharing of statistical data and metadata using modern technology. The dissemination of national
data and metadata using web technology and SDMX standards is encouraged as a means to reduce the international
reporting burden and to increase the efficiency of the international data exchange. For additional information on
SDMX, see http://www.sdmx.org/.
259 See the recommendations contained in decision 39/112, adopted by the United Nations Statistical Commission at
its thirty-ninth session (Official Records of the Economic and Social Council, 2008, Supplement No. 4
(E/2008/34),chap. I.B.
317
Chapter XXVII
Other international classifications relevant to trade statistics
27.1. Introduction. The present chapter describes the Standard International Trade
Classification (SITC),260
the Central Product Classification (CPC)261
, the Classification by Broad
Economic Categories (BEC)262
and the International Standard Industrial Classification of All
Economic Activities (ISIC).263
It is based on IMTS 2010, chapter III, on classifications. In
contrast with the Harmonized System (see chap. XIII), SITC, CPC and BEC provide alternative
groupings of goods which are important for various analytical purposes and are used in trade
data dissemination (see chap. XXVI). ISIC classifies the productive economic activities and is
increasingly used in trade data compilation (see chap. IV) and dissemination (see chap. XI).
A. Standard International Trade Classification, Revision 4
27.2. Use of SITC for dissemination and analysis. The history of SITC is described in IMTS
2010 and is not reproduced here. It should be recalled, however, that in 1999, the Statistical
Commission, at its thirteenth session, recognized that there would be a continuing need by users
for international trade statistics analysed according to SITC,264
and IMTS 2010 (para. 3.19)
recommended that, in addition to HS, countries use SITC for the dissemination and the analysis
of trade statistics according to user requirements. The majority of countries and international
organizations continue to use SITC for various purposes, such as market research and study of
long-term trends in international merchandise trade.
27.3. Classification criteria underlying the structure of SITC. While the fourth revision of
SITC (SITC, Rev.4) is based on the HS07 classification, it retains the classification scheme of
SITC, Rev.3, and classifies goods based on the following considerations:
(a) Nature of the merchandise and the materials used in its production,;
(b) Processing stage;
(c) Market practices and the uses of the product;
(d) Importance of the commodity in terms of world trade;
(e) Technological changes.
260
The fourth revision of SITC was issued in 2006 and contains a description of its origin and development. See
Standard International Trade Classification, Revision 4, Statistical Papers, Series M, No. 34/Rev.4 (United Nations
publication, Sales No. E.06.XVII.10).
261 The latest version of CPC is available from http://unstats.un.org/unsd/cr/registry/cpc-2.asp.
262 The fourth revision of BEC was issued in 2003. See Classification by Broad Economic Categories, Statistical
Papers, Series M, No. 53, Rev.4 (United Nations publication, Sales No. E.03.XVII.8).
263 The fourth revision of ISIC was issued in 2008. See International Standard Industrial Classification of All
Economic Activities (ISIC), Rev. 4, Statistical Papers, Series M, No. 4, Rev. 4 (United Nations publication, Sales No.
E.08.XVII.25).
264 See Official Records of the Economic and Social Council, 1999, Supplement No. 4 (E/1999/24), Chapter II, para.
24 (c).
318
27.4. Development of SITC, Rev.4. SITC, Rev.4, which was prepared by the United Nations
Statistics Division in cooperation with a number of interested international organizations, was
issued in 2006. The scope of SITC, Rev.4, remains the same as that of SITC, Rev.3, that is,
SITC, Rev.4, covers all goods classifiable by HS except for monetary gold, gold coin and current
coin. All SITC, Rev.4 basic headings (except for 911.0 and 931.0) are defined in terms of HS07
subheadings. Since SITC is now recommended only for analytical purposes, there was no need,
except in several special cases, to create new basic headings in SITC, Rev.4, that would be in
one-to-one correspondence with the new HS07 subheadings.
27.5. SITC, Rev.4, retains the overall structure of SITC, Rev.3, and consists of the same
number of one-digit sections, two-digit divisions and three-digit groups. The changes made were
at the level of basic headings and some subgroups. The classification contains 3,993 basic
headings and subheadings, which are assembled in 262 groups, 67 divisions and 10 sections. The
SITC sections are as follows:
0 Food and live animals
1 Beverages and tobacco
2 Crude materials, inedible, except fuels
3 Mineral fuels, lubricants and related materials
4 Animal and vegetable oils, fats and waxes
5 Chemicals and related products, not elsewhere specified
6 Manufactured goods classified chiefly by material
7 Machinery and transport equipment
8 Miscellaneous manufactured articles
9 Commodities and transactions not classified elsewhere in SITC
27.6. The coverage of the individual sections in all revisions of SITC is very similar, so that
historical series of data are largely comparable at this level of aggregation. The historical
comparability is also preserved for numerous series at the more detailed levels of the
classification.
27.7. National practices in use of SITC. According to a survey conducted by UNSD in 2006,
SITC remains an important analytical and dissemination tool for most countries, especially
developed ones (82 per cent of developed countries and 56 per cent of developing countries use
it). Many developing countries prefer to use the HS for dissemination, as this reduces their data-
processing and data dissemination burden. However, the dissemination of trade data in terms of
SITC by all countries is seen as a good practice, which provides both national and international
users with data of high analytical value. The conversion of the data compiled in terms of HS into
SITC commodity groupings requires minimal resources if it is conducted electronically using
appropriate conversion tables. Currently, UNSD converts all HS data into SITC data and may
assist interested developing countries in setting up the conversion procedures.
27.8. International practices in use of SITC. SITC is widely used in international databases,
and trade data expressed in terms of SITC are in great demand by research institutions, as the
SITC commodity aggregates are more suitable for analytical purposes and their time series are
available starting from the 1950s. The UN Comtrade database stores SITC time series starting
319
from 1962, and major international organizations like the World Trade Organization (WTO), the
United Nations Conference on Trade and Development (UNCTAD) and the World Bank publish
SITC trade data and use them for analytical purposes. For example, UNCTAD has defined
product groups based on SITC, Rev.3, for research and analysis purposes (see box. XXVII.1).
Box XXVII.1
UNCTAD product groups based on SITC, Rev.3a
In macroeconomic research and analysis, SITC is further aggregated into two broad commodity
groups: primary commodities, precious stones and non-monetary gold; and manufactured goods.
This is done to monitor the economic development of a country which normally starts by
exporting mainly primary commodities, then moves up into commodities with higher value
added (manufactured goods). However, for some countries with a high proportion of fuels
exports in their total trade, it is necessary to exclude fuels in the analysis, in order to better
monitor real economic development. In addition to those two broad groups, more detailed groups
are created owing to special analytical interests, such as iron and steel (as an indication of
construction activities), agricultural raw materials (normally used as intermediate inputs in
various industries) and textile fibres, yarn, fabrics and clothing (important manufactured goods
exported by developing economies). Other groups that do not fit within the main structure are
attached as memorandum items.
− Total all products
− − All allocated products (SITC 0 to 8 + 961 + 971)
− − − Primary commodities, precious stones and non-monetary gold (SITC 0 + 1 + 2 + 3 + 4 +
68 + 667+ 971)
− − − − Primary commodities (SITC 0 + 1 + 2 + 3 + 4 + 68)
− − − − − Primary commodities, excluding fuels (SITC 0 + 1 + 2 + 4 + 68)
− − − − − − All food items (SITC 0 + 1 + 22 + 4)
− − − − − − − Food, basic (SITC 0 + 22 + 4)
− − − − − − − − Food, basic excluding tea, coffee, cocoa and spices (SITC 0 + 22 + 4 less 07)
− − − − − − − Beverages and tobacco (SITC 1)
− − − − − − Agricultural raw materials (SITC 2 less 22, 27 and 28)
− − − − − − Ores and metals (SITC 27 + 28 + 68)
− − − − − − − Non−ferrous metals (SITC 68)
− − − − − − − Other ores and metals (SITC 27 + 28)
− − − − − Fuels (SITC 3)
− − − − Pearls, precious stones and non-monetary gold (SITC 667 + 971)
− − − Manufactured goods (SITC 5 to 8 less 667 and 68)
− − − − Chemical products (SITC 5)
− − − − Machinery and transport equipment (SITC 7)
− − − − Other manufactured goods (SITC 6 + 8 less 667 and 68)
− − − − − Iron and steel (SITC 67)
− − − − − Textile fibres, yarn, fabrics and clothing (SITC 26 + 65 + 84)
− − Unallocated (SITC 911 + 931)
− Memo: Primary commodities, precious stones and non-monetary gold, excluding fuels (SITC 0
+ 1 + 2 + 4 + 68 + 667+ 971)
− Memo: Ores, metals, precious stones and non-monetary gold (SITC 27 + 28 + 68 + 667 + 971)
a See http://unctadstat.unctad.org/UnctadStatMetadata/Classifications/Methodology&Classifications.html
320
B. Central Product Classification
27.9. History of the Central Product Classification. The Central Product Classification (CPC)
originated from initiatives in the early 1970s to harmonize international classifications. The new
classification was intended to cover both goods and services (products) and would use the
subheadings of the Harmonized System as building blocks for the part dealing with transportable
goods.
27.10. The final draft of CPC, called the provisional Central Product Classification, was
approved by the Statistical Commission and recommended for use by member States at its
twenty-fifth session in February 1989.265
The Provisional Central Product Classification266
was
published in 1991. Since then, there have been several revisions of CPC and in 2008 CPC,
Version 2.0, was completed. The Statistical Commission had adopted its structure at its thirty-
seventh session in March 2006.267
This version of CPC is divided into 10 sections, 71 divisions,
324 groups, 1,267 classes and 2,738 subclasses. Sections 0 to 4 are based on HS07,268
and
aggregate the HS codes into product categories suitable for various types of economic analysis
within the national accounts framework. Sections 0-4 of the Classification, like SITC, provides
for the rearrangement of HS-based international merchandise trade statistics for analytical
purposes. Sections 5 to 9 of CPC, Version 2.0, go beyond the HS categories to provide a
classification of service products.
27.11. National practices in use of CPC. Only a minority of countries currently publish trade
data in terms of CPC (11 per cent of developed and 8 per cent of developing countries).
However, more countries are able to make such data available electronically. As in the case of
SITC, the expression of trade data in terms of CPC does not require significant resources and can
be effected using appropriate conversion tables. It is advised that the country‘s agency
responsible for the dissemination of trade statistics make efforts to provide users with the data
expressed in terms of CPC. Such data will significantly facilitate the use of trade statistics in
economic analysis, including in the assessment of the impact of external trade on the
consumption and production patterns in a country and in the compilation of a country‘s national
accounts.
27.12. International practices in the use of CPC. The analytical value of CPC is being
recognized more and more by international organizations. For example, the statistical
Classification of Products by Activity (CPA) was created at the level of the European Union
(EU) by assigning CPC products to one single activity category. CPA is a product classification
whose elements are related to activities as defined by NACE, Rev. 2. Each product - be it a
transportable or non-transportable good or a service - is assigned to one single NACE, Rev. 2,
265
See Official Records of the Economic and Social Council, 1989, Supplement No. 3 (E/1989/21), chap. V, para.
95 (b) and (f).
266 Provisional Central Product Classification, Statistical Papers Series M, No. 77 (United Nations publication,
Sales No. E.91.XVII.7).
267 Ibid., 2006, Supplement No. 4 (E/2006/24), chap. I, sect. C, decision 37/105.
268 The correspondences between HS07 and CPC, Version 2.0 can be accessed at the United Nations Statistics
Division website at http://unstats.un.org/unsd/class.
321
activity. The linkage to activities as defined by NACE, Rev. 2, gives the CPA a structure parallel
to that of NACE Rev. 2 at all levels distinguished by NACE Rev. 2. However, the detailed
linkage between products and activities could be established only to a certain degree. There are
nevertheless cases where products can be assigned to activities only at a higher level than the
class level or even where a class in CPA 2008 has no activity counterpart in NACE Rev. 2,269
C. Classification by Broad Economic Categories
27.13. History of the Classification by Broad Economic Categories. The original version of the
Classification by Broad Economic Categories (BEC)270
was devised mainly to summarize data
on international trade by large economic classes of commodities and as a means for converting
trade data compiled in terms of SITC into meaningful end-use categories within the framework
of the System of National Accounts (SNA)271
, namely, capital goods, intermediate goods and
consumption goods.272
The BEC classification has 19 basic categories that can be aggregated to
approximate these three basic classes of goods, thus permitting trade statistics to be considered
jointly with other sets of general economic statistics, - such as national accounts and industrial
statistics, - for national, regional or global economic analyses.
27.14. BEC contains 7 sections, which are broken down, as applicable, by other criteria, such as
primary and processed goods, durable, semi-durable, and non-durable goods, etc., namely:
1. Food and beverages
2. Industrial supplies not elsewhere specified
3. Fuels and lubricants
4. Capital goods (except transport equipment), and parts and accessories thereof
5. Transport equipment, and parts and accessories thereof
6. Consumer goods not elsewhere specified
7. Goods not elsewhere specified
27.15. The Statistical Commission expected BEC to serve as a guideline for the development of
national classifications of imports according to broad economic categories.273
However, at its
sixteenth session (5-15 October 1970), the Statistical Commission recognized that countries
might wish to adapt the Classification for national purposes in different ways so as to meet
national requirements, and concluded that, consequently, the classification was not to be
regarded as a "standard" classification in the same sense as, for example, SITC.274
269
A detailed description of CPA is available from http://epp.eurostat.ec.europa.eu/portal/page/portal/cpa_2008/
documents/CPA2008introductoryguidelinesEN.pdf.
270 United Nations publication, Sales No.E.71.XVII.12.
271 See Official Records of the Economic and Social Council, Forty-fourth Session, Supplement No. 10 (E/4471),
paras. 116 and 118.
272 See United Nations, A System of National Accounts, Studies in Methods, Series F, No.2, Rev.3 (United Nations
publication, Sales No. E.69.XVII.3 and corrigendum), para. 1.50.
273 See Official Records of the Economic and Social Council, Forty-fourth Session, Supplement No. 10 (E/4471),
para. 123.
274 Ibid, Fiftieth Session, Supplement No. 2 (E/4938), para. 95.
322
27.16. Revisions of BEC. The original BEC was defined in terms of the divisions, groups,
subgroups and basic headings of the Standard International Trade Classification, Revised.275
Over the years several correlation tables between BEC and various revised versions of SITC and
the HS were prepared by the United Nations Statistics Division and made available publicly.276
However, the original structure of BEC has remained unchanged.
27.17. National practices in use of BEC. The United Nations survey of country practices
confirmed that BEC is recognized as an important analytical tool and many countries (41 per
cent of developed countries and 46 per cent of developing countries) publish trade data in terms
of BEC. Many more can make such data available electronically upon request. This is a good
practice and should be encouraged. A number of countries use BEC in their compilation of
national accounts and for other purposes. There is a significant interest in trade data expressed in
terms of BEC among research institutions. In this connection, it should be noted that it is good
practice for each country to prepare its own customized conversion table between HS and BEC,
as the main use of certain products may differ from country to country.
27.18. International practices in use of BEC. The usefulness of BEC is recognized by UNSD,
which converts trade data reported by countries in terms of HS to BEC categories and makes
such data available through UN Comtrade. Eurostat also disseminates data according to BEC,
and other international organizations make use as well of BEC in their analytical publications.
D. International Standard Industrial Classification of All Economic Activities (ISIC)
27.19. Purposes of ISIC. Unlike HS, SITC, BEC and CPC, which are product classifications,
ISIC is the international reference classification of productive activities. Its main purpose is to
provide a set of activity categories that can be utilized for the collection and reporting of
statistics according to such activities.
27.20. Uses of ISIC. Since the adoption of the original version of ISIC in 1948,277
ISIC has
provided guidance to countries in developing national activity classifications and has become an
important tool for comparing statistical data on economic activities at the international level.
Wide use has been made of ISIC, both nationally and internationally, in classifying data
according to kind of economic activity in the fields of economic and social statistics, including,
inter alia, statistics on national accounts, demography of enterprises and employment.
27.21. Revision of ISIC. The original ISIC was revised four times. The third278
and fourth
revisions of ISIC put increased emphasis on harmonization with other activity classifications and
product classifications, adding considerable complexity and constraints that had not applied in
earlier revisions of ISIC. As ISIC occupies a central position in the international comparison and
analysis of a wide range of statistics, a great deal of attention was devoted to ensuring that ISIC
275
Statistical Papers, Series M, No. 34, 1961 (United Nations publication, Sales No. 61.XVII.6).
276 See http://unstats.un.org/unsd/cr/registry/regot.asp.
277 Statistical Papers, No. 4, Lake Success, New York, 31 October 1949.
278 Inaternational Standard Industrial Classification of All Economic Activities, Statistical Papers, Series M, No.4,
Rev.3 (United Nations Publication, Sales No. E.90.XVII.1).
323
would be compatible with the economic structure, the statistical practice and the needs of the
different countries (or areas) of the world.
27.22. Use of ISIC in economic statistics. This classification is applied to classify statistical
units, such as establishments or enterprises, according to the principle economic activity in
which they engage. At each level of ISIC, each statistical unit is assigned to one and only one
ISIC code. The set of statistical units that are classified into the same ISIC category is then often
referred to as an industry, such as the ―furniture industry‖, which would refer to all units
classified in ISIC division 31 (Manufacture of furniture) and the ―construction industry‖, which
would refer to all units classified in ISIC section F (Construction). This standardized
categorization makes ISIC an important tool for socioeconomic statistics which need to be
arranged in accordance with the productive system of the economy.
27.23. The principal activity of an economic entity is the activity that contributes most to the
value added of the entity, as determined by the so-called top-down method. According to the top-
down method, it is not necessary that the principal activity account for 50 per cent or more of the
total value added of an entity or even that its generated value added exceed that of all other
activities carried out by the unit, although in practice it will do so in the majority of cases279
.
27.24. Wide use has been made of ISIC both nationally and internationally in classifying data
according to kind of economic activity. An increasing number of countries have adapted their
national activity classifications to the ISIC structure or can provide their data according to ISIC.
27.25. The fourth revision of ISIC. The Statistical Commission, at its thirty-seventh session, in
March 2006, adopted the structure of the current fourth revision of ISIC and recommended that it
be recognized as the international standard for economic activity.280
It contains 21 sections, 88
divisions, 238 groups and 419 classes. The ISIC sections are listed below:
A. Agriculture, forestry and fishing
B. Mining and quarrying
C. Manufacturing
D. Electricity, gas, steam and air conditioning supply
E. Water supply; sewerage, waste management and remediation activities
F. Construction
G. Wholesale and retail trade; repair of motor vehicles and motorcycles
H. Transportation and storage
I. Accommodation and food service activities
J. Information and communication
K. Financial and insurance activities
279
The top-down method follows a hierarchical principle: the classification of a unit at the lowest level of the
classification must be consistent with the classification of the unit at the higher levels. To satisfy this condition the
process starts with the identification of the relevant category at the highest level and progresses down through the
levels of the classification. For details, see International Standard Industrial Classification of All Economic
Activities (ISIC), Rev. 4, Statistical Papers, Series M, No. 4, Rev. 4 (United Nations publication, Sales No.
E.08.XVII.25).
280 See Official Records of the Economic and Social Council, 2006, Supplement No.4 (E/2006/24), chap. I, sect. C;
decision 37/105, para. (a).
324
L. Real estate activities
M. Professional, scientific and technical activities
N. Administrative and support service activities
O. Public administration and defence; compulsory social security
P. Education
Q. Human health and social work activities
R. Arts, entertainment and recreation
S. Other service activities
T. Activities of households as employers; undifferentiated goods- and services-
producing activities of households for own use
U. Activities of extraterritorial organizations and bodies
27.26. It should be noted that ISIC, Rev.4, is the outcome of a review process that spanned
several years and involved contributions from many classifications experts and users around the
world. This process resulted in an ISIC structure that is more detailed than that of the previous
version, in response to the need to identify many new industries separately. This is especially
applicable in the case of services. Comparability has also been enhanced with a number of other
regional activity classifications, making this version of ISIC a much-improved tool for
international data comparison. A number of alternate aggregations have been included in ISIC,
Rev.4. They provide analytical tools for use in areas that, for conceptual reasons, do not lend
themselves to aggregation within the existing ISIC structure.
27.27. Uses of ISIC in trade statistics. Since ISIC has been used for the collection and
presentation of statistics in many areas, there has been a strong need for correspondence tables
between ISIC and other classifications. When drafting ISIC, Rev.4, and simultaneously CPC,
Ver.2, a strong link was established between the two classifications. By rearranging the CPC
categories according to their industrial origin and using the link between CPC, SITC and HS, a
detailed correspondence table between the HS, SITC, CPC and ISIC was established.281
Countries may find this correspondence useful when rearranging the trade data compiled in
terms of HS by activity categories.
27.28. The results of the United Nations survey of country practices show that a significant
proportion of countries publish trade data in terms of ISIC (15 per cent of developed countries
and 24 per cent of developing countries). Usually, such data are obtained by the expression of
HS data in terms of ISIC using a conversion table. While such a practice may yield an acceptable
approximation of commodity exports generated by different economic activities (industries), the
assignment of commodity imports to specific economic activities (industries) is in general more
difficult. In general, the results of allocation of trade flows that were originally compiled by the
HS classification to ISIC categories of economic activity using conversion tables may be
misleading, as there is no one-to-one correspondence between products and activities. In this
context, IMTS 2010 (para 3.29) gives preference to the approach in which countries obtain the
additional information needed to identify the main economic activity of traders—for instance, by
linking customs records with information in the business registers (see chap. XI)—and perform
281
These and other correspondence tables are available in electronic format only and can be accessed at the United
Nations Statistics Division website (at http://unstats.un.org/unsd/class).
325
the appropriate aggregations on the original data at the microlevel. For details on the use of ISIC
in trade data collection through enterprise surveys, see chapter IV.
E. Correspondence and conversion tables and their use
27.29. Correspondence tables. The correspondence tables (also known as correlation tables)
define the scope of headings of one classification in terms of the scope of headings of another
classification. There can be a strict one-to-one correspondence between headings, when the
scope of a heading of one classification is equal to the scope of a heading of another
classification, or various kinds of split correspondence. A split correspondence exists when the
scope of a heading of one classification partially overlaps with the scope of several headings of
another classification. Whenever successive versions of the same classification are produced, a
correspondence table between the headings of the revised and original versions is issued. A
reverse table, showing the correspondence between headings of the original and revised versions,
is also frequently produced.
27.30. Conversion tables. The correspondence tables allow a continuous time series to be
maintained when various versions of a given classification are used data are to be expressed in
terms of another classification. However, if the scope of a heading of one classification partially
overlaps with the scope of several headings of another, an exact correspondence becomes
impossible and there is a discontinuity in some data series. For data-processing purposes it is
frequently desirable to substitute an approximate, but one-to-one correspondence for a split
correspondence. When this is done, the resulting table is called a conversion table. It should be
noted that if there are no split correspondences, the data conversion can be carried out using the
correspondence table. Examples of such a straightforward conversion are the conversion of
HS88 data into SITC, Rev.3, data and the conversion of HS07 data into SITC, Rev.4, data, as
those SITC versions used the respective HS version‘s subheadings as building blocks. In
contrast, the conversion of HS88 and HS96 data into SITC, Rev.4, data would require
approximations, as there exist a number of split correspondences between those versions of HS
and SITC, Rev.4.
27.31. The use of conversion tables containing such approximations is warranted if the scope of
the headings involved is quite similar. However, differences in scope between certain basic
headings may be so great, as to eliminate the possibility of a meaningful one-to-one
correspondence at that level. In such a case, a correspondence can be established only between
basic headings of one version and the higher-level headings of the other. The responsible agency
should study which approach should be adopted in order to achieve a reasonable balance
between the requirement of data series continuity and data comparability.
27.32. Uses of the correlations and conversions tables. The main uses of correlation and
conversion tables in trade statistics include:
(a) Maintenance of comparable data series when the classification used in compilation is
revised;
(b) Reconciliation of data obtained from various sources (and expressed in different
classifications);
326
(c) Recompilation of trade data for another purpose (e.g., to analyse trade in terms of broad
categories of goods or by various economic activities).
27.33. Informing users. To make users aware of the methodology adopted for data conversion, it
is good practice to ensure that all correlation and conversion tables are documented and made
publicly available as part of the metadata. It is advised that the agency responsible alerts users
regarding the data conversions that might diminish data comparability, so they can make their
own assessment of whether such data are suitable for their purposes.
27.34. Correlation tables provided by the World Customs Organization (WCO). WCO produced
the first version of the HS in 1988 (HS88). In 1986, it had issued a publication entitled
―Correlation Tables between the Harmonized System and the 1978 version of the CCCN‖, to
link HS with the Customs Cooperation Council Nomenclature (CCCN).282
This was a two-way
correlation, that is, from HS to CCCN, and from CCCN to HS. When HS is revised, the WCO
issues correlation tables between the new and preceding versions of HS and makes them publicly
available.283
27.35. Correlation and conversion tables available from UNSD. UNSD has created correlation
and conversion tables between various versions of the HS, SITC and BEC, so that it could
maintain its time-series data on trade.284
UNSD also maintains correlations and conversions
between HS, CPC and ISIC.285
If compilers need to convert their data from one classification to
another, it is good practice for them to take into considerations correlation and conversion tables
available from international and/or regional organizations.
27.36. Correspondence tables with non-HS national commodity classifications. If a country
compiles data in terms of a non-HS classification (provided that said classification is highly
detailed, with criteria similar to the ones applied in HS), compilers are advised to develop a
correspondence table between the non-HS classification and HS, and to make it available to
interested users.
282
This text was initially known as the Brussels (Tariff) Nomenclature (BTN), but in 1976 it was renamed the
Customs Co-operation Council Nomenclature (CCCN), to prevent any confusion regarding the international
organization responsible.
283 See http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools.aspx.
284 UNSD converts data based on the most detailed level of the applicable classifications.
285 See http://unstats.un.org/unsd/cr/registry/regot.asp.
Part six. External trade indices and seasonally adjusted data
329
Chapter XXVIII
External trade indices
28.1. Introduction. The present chapter aims at providing guidance on the compilation of unit
value and price indices of external trade, which are briefly discussed in IMTS 2010, chapter XI.
It provides information on assessing the main advantages and disadvantages of the various
approaches to their compilation, as well as their potential complementarities, both from the
conceptual point of view and in terms of their practical implementation.
A. General overview
28.2. Need for external trade indices. Many users need more information than trade values by
country or by commodity: they require information on prices and volumes as well. Information
on the development of prices and volumes is generally presented in the form of indices. In IMTS
2010 (para. 11.1), it is recommended that all countries produce and publish, on a monthly,
quarterly and annual basis, both volume (quantum) indices and either price or unit-value indices
(UVIs) for their total imports and exports. Countries are also encouraged to calculate and publish
such indices for commodity groups of particular importance to countries at least quarterly and
annually.
28.3. Some important uses of external trade indices. External trade indices are in general used
to eliminate the effects of price changes and obtain trade volume estimates. National accounts
require a decomposition of measures of value into price and quantity for the calculation of its
real flows. Government departments and international agencies use price indices to define,
evaluate and resolve trade policy issues. They constitute a key tool for tariff and quota
negotiations, as they provide an indication of the inflation of imports and exports as well as the
international competitiveness of various industries and sectors. Moreover, business analysts and
economists use international trade indices for analysis and research in respect of such questions
as the causes of the real-economy effects that price changes have on trade.
28.4. Levels of aggregation. The level of detail required in the index numbers of imports and
exports is not necessarily the same for all the purposes for which they are used, and national
statistical offices need to strike a balance among the various demands of different types of users.
For some purposes, no detailed information on the price changes of individual commodities is
required; for others, the usefulness of the price statistics depends entirely on the commodity
breakdown that can be made available. For instance, while tariff-policy decision-making and the
analysis of the effects of trade on employment and productivity by industry often require highly
disaggregated prices, macroeconomic studies focused on a country‘s terms of trade and its
balance of payments require aggregate measures of price and volume trends of exports and
imports.
28.5. Macroeconomic uses. From the perspective of national accounts, price and volume
indices of external trade in goods play an essential role in the estimation of macroeconomic
aggregates in constant prices. Exports and imports in supply and use tables (SUTs) at current
prices are deflated by foreign trade price and/or unit value indices at the product level in the
process of obtaining supply and use tables in constant prices. Also, exports and imports in
330
constant prices are a necessary input into general macroeconomic forecasting and model-
building, as well as analyses of balance of payments.
28.6. Microeconomic uses. Disaggregated measures of price change are especially relevant for
uses that entail the transmission of inflation across national boundaries and within those
boundaries, from one sector to another. Studies that serve tariff-policy discussions also require
the availability of highly disaggregated prices to an extent that could go well beyond the most
detailed level of a purely statistical commodity classification. Also, there is increasing interest in
understanding the relative importance of price-based versus quality-based competition. The need
for detailed answers to questions like these cannot be satisfied through utilization of traditional
price and value indices at the macroeconomic level.
28.7. Divergent objectives of users of external trade indices. Statistical agencies often face
divergent demands for measures of price and volume changes in external trade, and it is not
always clear how the different objectives of users should be ranked. In this complex situation, a
statistical agency must choose among the various strategies open to it—strategies that have to do
with both sources of data and methods of calculation. The choice of approach must also be
pragmatic, taking into consideration resource constraints, data availability and the practical
feasibility of the selected methodology. The objective is to produce, subject to the usual
budgetary constraints, the ―best‖ measures possible for changes in the prices and volume levels
of both imports and exports, detailed, to the extent possible, by major commodity groups and
partner countries.
B. Data sources and measurement approaches
28.8. Price and unit-value indices. There are three kinds of indices that can be produced to
reflect prices for imports and exports: unit-value indices that are based primarily on customs
documents, price indices that are based on survey data and ―hybrid‖ indices that combine both
customs records and survey data.286
Although price indices are generally preferred on
methodological ground, in practice, countries may not have the resources available to compile
that information. Many countries compile only unit-value indices or survey-based price indices,
while others use both approaches in a complementary manner.
28.9. Alternative data sources. The main options available in terms of data sources are the use
of customs records, the implementation of specific surveys of exporters and importers, and the
taking advantage of other established domestic-price surveys. Additional alternatives include
relying on other data providers such as commodity boards and associations of exporters and
importers, and utilization of price indices of partner countries as proxy or supplementary
indicators.
28.10. Advantages of data from customs records. An important advantage of average unit values
is that they effectively increase the number of price observations used to calculate the index,
thereby reducing sample variance. Although the customs source often excludes transactions of
286
For detailed information on external trade price indices and unit values, see Export and Import Price Index
Manual: Theory and Practice (Washington, D.C., International Monetary Fund, 2009). Available from
http://www.imf.org/external/np/sta/xipim/pdf/xipim.pdf.
331
very low value and/or volume, as well as special transactions (e.g., those that are kept
confidential on the grounds of national security, etc.), they often provide an almost full coverage
of the transactions on which the target population of a foreign trade index should be based on
and are more frequently updated than most other data sources. Also, when the statistical agency
has access to individual customs records, working with detailed data can support the compilation
of trade indicators at the microeconomic level for various analytic purposes, especially when
linked to other statistical sources through business registers.
28.11. Advantages of data from direct price surveys of imports and exports. There are various
advantages often associated with the use of survey data for the estimation of foreign trade
indices. One such advantage is the improved possibility of controlling ex ante for potential
biases and variability due to non-price factors, including changes both in the mix of products in
the market basket and in the quality of the items being priced. Also, through direct surveying of
exporting and importing firms, the risk of using erroneous data (e.g., due to misclassification)
can be mitigated, granted that there are appropriate communication channels for providing
guidelines and feedback to respondents. Moreover, depending on the details collected from
survey respondents in terms of product specifications and attributes, survey data open the
possibility of carrying out quality adjustments using, for instance, hedonic methods. Further
potential advantages of price surveys include improved timeliness, as in some countries price
data from surveys are available earlier than unit values from customs records, and improved
coherence with other price indices (such as producer, construction, wholesale/retail and
consumer price indices).
C. Challenges in the application of various approaches
28.12. Heterogeneous product categories in detailed customs records data. The main drawback
in the use of custom records is that product codes, even at the most disaggregated level for which
―unit values‖ can be calculated, often refer to heterogeneous sets of goods, while extensive direct
enquiries of firms aimed at controlling for important price determining characteristics in each
individual transaction (e.g., terms of sale, timing of contract, and specific model attributes) are
normally not feasible. This implies that an increase or decrease in unit values based on averaging
values and quantities from customs records may be due to unidentifiable non-price effects which
impair the measurement of pure price changes. This is especially the case for complex products
like electronic appliances (computers, cellphones, audio-visual equipment), large industrial
machinery, etc., which may have heterogeneous units of quantity and price-determining
characteristics even at the most detailed level of the commodity classification. Also, data from
customs records are usually unsuitable for capturing average price changes of products that
experience substantial technological change.
28.13. Errors in filling customs declarations. International experience has shown that large
differences between the highest and lowest prices (unit value range) for single commodity codes
are often due to errors in filling out the customs declarations themselves. For instance, declarants
may have difficulties in choosing the correct commodity code, filling in the correct partner
country or reporting the correct unit of quantity. To some extent, this can explain the fact that
332
the distributions of unit values are often skewed even at very fine levels of detail (say, the HS
eight-digit level).287
28.14. Simplification of customs declarations requirements. The compilation of unit-value
indices presupposes the existence of administrative and regulatory procedures whereby importers
and exporters are required to provide enough details on their individual transactions through
customs records or other specific surveys (e.g., the Intrastat system). However, as national
authorities move towards simplification or even elimination of customs documents, the relevance
of administrative records for statistical purposes may diminish in relative terms.
28.15. Incomplete coverage and small sample sizes of price surveys. Survey-based external trade
indices require having an appropriate survey frame from which to select a sample of
establishments for collection of information on a set of well-defined commodities whose overall
price changes are representative of all transactions taking place. The survey frame should be
representative of the target population, that is, of all entities engaged in imports and exports of
goods. However, the fact that survey frames based on the statistical business registries normally
identify only businesses that engage in regular export and import operations can be a source of
concern in cases where a significant fraction of total trade is carried out by casual importers or
exporters. Also, sample surveys are usually expensive, and consequently sample size is often
limited by budget constraints and also the burden on respondents. Having a small sample size
may in turn lead to biased estimates and imputations if not adequately controlled within a well-
structured and coherent statistical design. Achieving such control is a difficult task in itself.
28.16. Trade-off between availability and comparability in specifications of price surveys.
Although, in principle, it is possible to produce a highly detailed definition of the characteristics
of the products to be priced through surveys, in practice, there exists a trade-off between the
level of detail in the specifications of items and the ability of survey respondents to consistently
match these specifications over time. As in the case of elementary unit-value indices based on
data from customs records, survey-based price indices may also suffer to some extent from not
comparing like with like, especially if the specifications of the product varieties being priced are
too loose, and shifts in the relative share of different price-determining characteristics remain
unknown. These difficulties are compounded by the fact that the total number of transactions per
respondent per period of time may be relatively small, making it necessary to collect average
prices over longer periods of time instead of prices for individual transactions.
D. Methodological issues
28.17. Elementary unit-value indices. The compilation of price indices normally involves a first
stage in which price indices for elementary commodity groups are calculated, which are
subsequently combined to produces price indices at higher levels of aggregation. In the case of
unit-value indices based on customs records, elementary price indices are simply ratios of unit
values each of which is the result of dividing total value by total quantity at the most detailed
level of aggregation available (which can be a specific stratum within a particular commodity
287
Note that large variance of unit values can imply erroneous declarations as well as heterogeneity in the
commodity composition of individual HS codes.
333
code, deemed to include relatively homogeneous types of goods). Elementary unit-value indices
are implicitly weighted by quantity information for each individual record.
28.18. Elementary price indices. On the other hand, elementary price indices based on survey
data involve the unweighted aggregation of price relatives (i.e., the ratios of directly reported
prices over time), as data on the traded value shares, or quantities of the surveyed goods, are
usually not readily available.288
Based on the analysis of the properties of various alternatives,
one of the preferred formulas for the calculation of elementary price indices is the Jevons index
formula, which takes the geometric average of the price relatives (or, equivalently, the ratio of
the geometric average of prices in each period). However, this formula is highly sensitive to
extreme price decreases, and its practical use may require imposing upper and lower bounds to
the individual price relatives used in the compilation. Also, the Jevons index makes the implicit
assumption that revenue shares are constant, which is equivalent to assuming that quantities fall
as relative prices increase.289
28.19. Index formulas at higher levels of aggregation. Regardless of elementary price, indices
are based on (quantity-weighted) unit values or (unweighted) price relatives. They need to be
combined into aggregate indices for broader categories of goods with the help of a specific
weighting structure. There are various alternative formulations for calculating these aggregate
indices, and although their detailed discussion is not within the scope of this chapter, some of the
most important classes of index formulas are as follows:
(a) Indices based on fixed baskets of goods and services, often referred to as Lowe-type
indices. They measure the change in the value of a commodity group by holding the quantities of
their individual commodities at a constant level. These indices are in general defined by the
equation
,
where ( , represents a price-quantity pair for commodity i = 1, …, n in period t, and
is the ―hybrid‖ value share of commodity i obtained by valuing the quantities of
period t = b at prices of period t = 0. The well-known Laspeyres and the Paasche indices are
special cases of a Lowe index, as the former is obtained by setting b equal to 0, and the latter by
setting b equal to t. These types of indices, which are easy to explain to users, are compiled by
many statistical offices in practice;
(b) The class of superlative indices. These are indices that treat the prices and quantities of
the periods being compared symmetrically, and in general they are preferable on theoretical
grounds. Two specific superlative index formulas are:
288
The design of a price survey may introduce an implicit weighting structure, e.g., through the probabilistic
selection of establishments based on their shares in total exports, etc. However, at the elementary level,
implementation of such probabilistic sample designs in the compilation of foreign trade price indices is infrequent.
See Export and Import Price Index Manual: Theory and Practice for a more detailed discussion.
289 See Export and Import Price Index Manual for a discussion of the advantages and disadvantages of alternative
formulas for the calculation of elementary price indices.
334
(i) The Fisher index, the geometric average of the Laspeyres and Paasche indices and
defined by the equation:
;
(ii) The Törnqvist index, the geometric weighted average of the price relatives, with
weights given by the arithmetic average of value share of each commodity in the
two periods being compared. The index is defined by the equation
,
where .
28.20. Chain indices. If a fixed-base index is used, it is good practice to frequently update the
base period (at least every five years), as the quantities used to determine the weight structure
become less relevant in describing the actual mix of goods being traded. As an alternative, chain
indices are constructed by linking a series of individual indices that bilaterally compare every
two consecutive periods, so that in each comparison the weight and price reference periods are
moved forward in time. However, chaining should not be carried out at the sub-annual level
before seasonal adjustment of the time series, as the seasonal fluctuations in prices and quantities
would cause serious distortions in the chained time series owing to the fact that chaining is
―path-dependent‖, i.e., the change in the index between two given periods depends on the price
changes that occur in each and all the intervening periods.
28.21. Focus on optimal use of trade data from administrative sources. With the above in mind,
the methodology used in compiling unit-value indices for imports and exports should provide for
the handling of seemingly erratic behaviour in customs data, so as to extract as much information
as possible from the data available in custom records and other administrative sources. This may
entail, inter alia, the use of appropriate stratification variables to disentangle the difference
between genuine variations in price levels and shift effects in the quality or in the mix of goods
reported under a given item specification.
28.22. Error detection and treatment of outliers. The statistical properties of the data used in the
compilation of foreign trade indices, either from administrative or survey sources, also need to be
examined in detail to identify outliers and correct or eliminate outright erroneous observations.290
In general, the treatment of outliers from direct surveys is less complicated than for UVI‘s, due
to the relatively smaller amount of information collected by products and by traders. However, in
both instances compilers should try using to the maximum extent possible all the information
they have available to determine whether particular data points should be considered outliers or
not.
28.23. Treatment of quality change. Compilers of foreign trade indices based on price survey
data can handle quality changes by asking survey respondents to provide an estimate of the value
290
Statistical analyses may include estimation of univariate densities and cluster analysis to help assess whether a
certain strata or commodity classifications may composed by various sub-categories of products with heterogeneous
price trajectories.
335
of the quality change whenever an item description has changed. An adjustment can be made to
the price to separate out the value of the description change from any remaining price change. In
some cases where the items being compared are too divergent, the original item needs to be
replaced by the new one and the price series is starting over again from the current period.291
The
use of hedonic regression models to estimate the value of the quality change for technology
products like computers and some computer peripherals is also a good practice, which is
currently followed by some countries.
E. Other issues
28.24. Integration of the statistical production process and index calculation. As the
compilation of foreign trade indices can reveal the presence of outliers by decomposing value
trends into their price and quantity components, it is good practice to allow for the compilation
process of trade indices to feed back into the compilation of raw data and vice versa.
28.25. Need for integrated economic statistics. In most countries, there is less than complete
compatibility between the coverage, methods, classifications and adjustments of price index
numbers in external trade and domestic indexes, even if these indices must be related if the
mechanism of transmission of inflation across national boundaries and the way in which
domestic prices are set are to be properly understood. It is therefore important to develop
integrated economic statistics based on common statistical business registers which allow the
linkage of customs declarations data with information gathered from surveys, tax records and
other direct and indirect sources of information.
28.26. International comparability of external price indices. Governments as well as the
business community show considerable interest in monitoring the performance of their countries
vis-à-vis commercial competitors in international markets. While changes in a country's
competitive position may be gauged from an analysis of its market shares, one of the key
explanatory variables of the change in such shares is the measure of the evolution of relative
prices across countries. This highlights the need for countries to compile and make available (in
terms of a common currency) mutually consistent measures of price changes for the traded
commodities at matching levels of detail.
28.27. Role of international economic classifications. While the commodity classifications for
the compilation of export and import indices normally follow external trade classifications (HS
or SITC), special emphasis should be directed to linking them to those of domestic-price indices,
in particular CPC and related national classifications.
28.28. Use of foreign price indices. Foreign price indices could also be used as a ―second best‖
measure in some special circumstances. For example, if a country's economy is highly
interconnected with that of another country, there may be specific commodity groups for which
they can be considered to constitute a single market, with purchasers in both countries facing
approximately the same price movements. If this hypothesis is reasonable, the producer price
index of a foreign, closely related economy can be used as a proxy for the price index of imports
291
This is, for instance, a practice currently followed by the United States Bureau of Labor Statistics.
336
from that country. Nevertheless, it is important to emphasize that foreign price indices are only
an ―indirect‖ second-best way to measure variation of prices of internationally traded goods, and
their linkage is generally imperfect and its accomplishment is difficult.
F. Country experiences
1. Practices of Norway
28.29. Current practices. The Department of Economic Statistics of Statistics Norway uses unit-
value data from customs records and combines them with survey-based price data to compute
price and volume indices of external trade in commodities. Survey price data are used for some
commodity codes for which customs data are not considered acceptable as a source of price
statistics. When this is the case, priority is given to Norway‘s data sources, and only if they, too,
are not adequate, are data collected from international sources (such as the United States Bureau
of Labor Statistics).
28.30. Use of foreign trade indices in national accounts compilation. Detailed data on exports
and imports at the HS eight-digit level are aggregated to the national accounts product level
(going from about 6,500 commodities to approximately 700 product categories). Values of
exports and imports are used in balancing the national accounts at current prices. Price
information is applied to national accounts at the detailed CPA level to derive exports and
imports at constant prices, and to estimate price changes of components where no price
observations exist (namely, for intermediate consumption, gross fixed capital formation, and
final consumption).
28.31. Future developments. It is expected that, in the future, large importers and exporters will
be allowed to lodge consolidated customs declarations on a monthly basis. Although this will
have a positive effect in terms of trade facilitation, statisticians will need to rely on fewer data
records (owing to the consolidation of single transactions into monthly totals) ; hence, error
detection procedures may be further complicated. Also, the general trend towards removal of
tariffs and duties, and the inherent interest of customs in simplifying and facilitating trade
procedures, means that additional efforts will have to be made in order to preserve the quality
and coverage of data from administrative customs records. Currently, the goal of Statistics
Norway is to replace unit-value indices with survey-based price indices for both exports and
imports. For more detailed information on the practices of Norway, see annex XXVIII.A.
2. Practices of Canada
28.32. Current practices. Statistics Canada compiles an International Merchandise Trade Price
Index (IMTPI), which is a composite price index designed to express, in a single index, price
changes that involve a range of commodities. In order that realities of price movement may be
accurately reflected, a fixed basket of goods is chosen which are representative of, and correlated
to, the rest of the commodities in the trade universe. The index is based on a non-random sample
of import and domestic export commodity classes. Data are extracted from administrative files
and derived from other Statistics Canada surveys and/or other sources. International trade price
and volume indices are constructed on the basis of unit values derived from detailed customs-
337
based data and survey price indices taken from Canadian and foreign sources. As a general rule,
unit values are retained for relatively homogeneous commodities such as primary and semi-
manufactured goods; and proxies are used for heterogeneous commodities, particularly
manufactured goods ready for final use. Several organizations provide the International Trade
Division with proxies that are used as price relatives in the calculation of the Laspeyres and
Paasche price indices.292
As Canada‘s economy is very much interconnected with that of the
United States, the United States Bureau of Labour Statistics producer price index is used as a
proxy for the prices of some Canadian imports from the United States. For more detailed
information on Canada‘s practices, see annex XXVIII.B.
3. Practices of the Czech Republic
28.33. Current practices. The export and import price index has been calculated for the Czech
Republic since 1998. Prices are measured through a national monthly statistical questionnaire,
with price relatives collected from both production enterprises and enterprises engaged in foreign
trade only, about 580 of them engaged in exports and about 590 in imports. At present, the
weight pattern includes approximately 2,050 exported and 2,100 imported products, raw
materials and supplies, which take up a significant share in the value of external trade (both
exports and imports). Foreign trade indices are calculated on the basis of invoiced prices
(without duties, VAT and consumer tax) which are converted into national currency using the
average monthly exchange rates declared by the National Bank. The price indices thus reflect
changes in foreign-exchange rates. The breakdown of the export and import price index adjusted
by exchange-rate influences has been published monthly since January 2011. The index is
compiled according to the Harmonized System and is transformed to conform to the SITC,
Rev.4, breakdown into its main groups and the Czech Republic Classification of Product by
Activities (CZ-CPA 2008) , so as to meet the needs of national accounts and Eurostat. The first
estimates are definitive, which means that ordinary revisions (revisions for the purpose of
obtaining more precise previous estimates without methodological changes or modification of
computation concepts) are not carried out.
4. Practices of Germany
28.34. Current practices: calculation of unit-value indices. The external trade price indices
constitute an important module within Germany‘s overall system of price statistics, which is
intended to measure the development of prices across all of the main stages of the economy in a
methodologically consistent way. In Germany, (Laspeyres) volume indices and (Paasche) unit-
value indices (UVIs) are calculated and published on a monthly basis in a breakdown by detailed
commodities and country groups. The compilation is based on the results of external trade
statistics. Even though price indices based on survey data are generally preferred for
methodological reasons, UVIs are calculated as well, since they can be derived easily from
already existing foreign trade figures and allow a breakdown by detailed commodities in
292
The Statistics Canada Industrial Product Price Index (IPPI) and Automotive Price Index by Model, as well as
data on exports of crude petroleum and natural gas (by pipeline), are derived from its Manufacturing, Construction,
and Energy Division. Price indicators derived from other organizations include the Bank of Japan Export Price
Index, price data on electricity from Canada‘s National Energy Board, and the Computer Price Index by Component
from the United States Bureau of Economic Analysis (BEA).
338
combination with partner countries. In this way, a methodologically consistent set of nominal
and real export/import figures is available which is based exclusively on foreign trade statistics.
By means of volume indices and UVIs the nominal figures of foreign trade statistics can be split
up into a quantity and a value component. Another advantage of UVIs is that they are calculated
on the basis of up-to-date weighting factors (while calculation of price indices requires
unchanging weighting factors of the relevant base year).
28.35. Compilation of price indices. In respect to the analysis of price changes in foreign trade,
besides UVIs, ―real‖ price indices are also calculated monthly as Laspeyres indices for a large
number of commodity groups and by groups of countries. To a large extent, the data are obtained
through an enterprise survey. Only in exceptional cases are other sources (e.g., stock market
valuation, market reports) appropriate as providers of actual trade prices. The generation of the
survey sample follows a multi-stage procedure. First, a basket of representative commodities is
defined, which can be derived from foreign trade statistics. Second, the reporting enterprises are
selected with regard to their share in the total value of the relevant commodities.293
Finally, the
enterprises decide on specific ―price representatives‖ (single cases of sale or purchase) for each
of the selected commodities. As a result, the survey covers 6,000 enterprises reporting nearly
10,000 single prices per month. The advantages and disadvantages of a price survey have been
described above. The main methodological issue is to keep the parameters underlying the
calculation (goods and enterprises selected, sample of price representatives, weighting scheme)
as constant as possible (according to the Laspeyres-concept).
5. Practices of Italy
28.36. Current practices. External trade UVIs in Italy are chained Fisher-type indices, with each
monthly link calculated as the squared root of a Laspeyres- and Paasche-type index, both based
on the previous year. Each Laspeyres and Paasche link is a weighted average of elementary unit
value indices belonging to ―product-country of origin/destination-flow‖ strata, the products being
classified according to the Combined Nomenclature at the eight-digit level. The total number of
elementary strata is about 220,000. Outlier detection procedures are applied to the log-
distribution of the elementary unit values (levels) in each stratum, to control for the variability
inside the strata, due mainly to errors on reported quantities. No imputation method is applied to
replace the deleted observation so as not to introduce imputation bias in the resulting
distributions. Deleted unit values are taken into account through maintaining their original
weights in the calculation of the aggregated indices.
293
The survey is not based on a random sample: the choice of enterprises is ―targeted‖. Hence, it is not possible to
estimate sampling errors. Nevertheless, the reporting companies can be considered representative, since they are the
leaders in the relevant market segment.
339
Annex XXVIII.A.
Experience of Norway
1. Unit values from customs records
28.A.1. Frequency and volume of data from customs records processed. Statistics Norway
receives administrative data from the Norwegian customs administration authority (TAD), every
day. The number of customs data records used by Statistics Norway in the creation of exports
statistics has increased 23 per cent since 2000, and for imports this increase has been more than
80 per cent. In 2010, Statistics Norway used about 1.4 million data records of exports and almost
11 million records of imports (representing 44.3 per cent and 99 per cent of Norway's total value
of exports and imports, respectively).
28.A.2. Two-step process for unit value calculation. The main body of information on
Norway‘s external trade statistics comprises administrative data from customs declarations (the
single administrative document (SAD)). As the single administrative document does not contain
a price variable, unit values are derived from the variables value and quantity. This is carried out
based on the total commodity value and quantity, after a two-step validation process which
involves stratification to identify commodity codes whose the data may be utilized for price
statistics.
28.A.3. Stratification below the commodity code level. In the first step, data in each commodity
code are stratified below the HS-code level. The aim of the stratification is partly to arrive at
more homogeneous strains within the code and, simultaneously, to reduce the overall variation
observed at the code level. There are three stratification variables: enterprise (VAT number),
partner country (ISO code) and quantity group (based on weight or supplementary unit). The
choice of the best stratification variable for a commodity code in the reference year is made by
means of automated analyses run on the data of the previous (base) year.
28.A.4. Outlier detection and data editing. Before the estimation, the data are run through an
editing procedure controlling for extreme prices. The data are subjected to a Hidiroglu-Berthelot
(HB)-based procedure for identifying extremes, both on the stratum level and within the strata.
Extremes are excluded from further calculations. For each stratum within an eight-digit
commodity, a set of control variables is calculated. The purpose of this step is to evaluate
statistical properties of unit prices resulting from each method of stratification (enterprise,
country and quantity group). The indicators are:
(a) Regularity of transactions (number of months in year T-1 with no transactions < six)
(b) Price variation (coefficient of variation < 0.5);
(c) Value (> 1 per cent of the total value on commodity level);
(d) Quantity (> 1 per cent of the total quantity on commodity level).
28.A.5. Selection of customs data for the computation of unit value indices. The ratio of the
arithmetic average to the quantity-weighted average of the monthly unit values, at the transaction
level, is used as a background variable for evaluating the stratification of the data and choosing
340
which method to use for each HS code. Taken together, these indicators give information on
stability, and magnitude and concentration of the strata. A stratum is accepted if the values of all
the indicators are within the required limits. If one or more of the limit values are exceeded for a
stratum, the stratum is rejected and therefore does not become a part of the calculation of price
indices.
2. Producer price indices (PPIs) for external trade
28.A.6. Integration of survey data from producer price indices. For some important
commodities, data from customs records are deemed too heterogeneous to yield acceptable price
information. To compensate for such shortcomings, survey-based price indices are used as
indicators in external trade statistics. In Statistics Norway, the survey that yields producer price
indices (PPIs) covers the domestic, export and import markets. An important characteristic of the
Norway‘s system of price statistics is the fact that external trade considerations guide and
influence the PPI production, particularly in respect of determining which commodity codes are
included in the sample.
28.A.7. Survey implementation. Data collection is mainly conducted through questionnaire,
whereby respondents also receive guidance in the form of an information brochure as well as
semi-annual messages from Statistics Norway. The statistics register employed by Statistics
Norway includes all resident firms that produce or deal with the commodities in question and
have 10 or more employees. The sample is based on a scheme of probability proportional to size.
Prices are collected over time for selected well-defined products, all of which are classified
according to the HS nomenclature. In practical terms, this means that a survey questionnaire
makes reference to a specific HS commodity classification, and the respondent must provide
price data for a product model that best suits this commodity description; the price of this
product is reported monthly.
28.A.8. Index formulas. Elementary indices are calculated at the HS level, using a geometric
mean. Indices at the HS level are then aggregated, using a weighted average, to form a
Classification of Products by Activity (CPA) index, and from the CPA level, indices are
aggregated to CPA level of four-, three-digits, etc. This is carried out for each of the three
markets (domestic, export and import). Indices above the elementary level are calculated using
the Laspeyres formula.
28.A.9. Imputation. During the process of compilation of PPIs, missing HS data are imputed
using higher levels of aggregation. Sequences of 13 consecutive months are used to calculate a
short-term index, where the base is always December of the previous year.
3. Other data sources
28.A.10. Alternative sources of price data. In addition to survey data and customs records, there
are special data-collection mechanisms in place, including the use of price information from
international commodity exchanges and foreign statistical agencies. For internationally traded
commodities (refined oil products, nickel, etc.) price data are collected from the London Stock
Exchange and London Metal Exchange.
341
28.A.11. Use of foreign indicators of price trends. For other products (especially exports and
imports of capital goods), international price indicators are in some cases considered to be
representative of the price development of the same product group in Norway‘s trade. For
instance, data from the United States Bureau of Labor Statistics are used for about 80 export
products and 40 import products.
4. Data validation and editing
28.A.12. Validation of customs data. Data validation procedures are routinely put in place in
order to detect errors in the statistical values reported in the customs declarations. In this regard:
(a) Tests were introduced in 2011 that are applied directly on data as they are entered by
declarants of exports or imports. These tests aim at identifying obvious errors or data
inconsistencies at the first step of data flow, and include: validity checks for commodity and
country codes, price verifications based on upper and lower thresholds, quantity checks, and
checks for implausible data by commodity or partner. These and other controls are also applied
within the customs service‘s own information systems;
(b) Prior to loading customs data into the Statistics Norway database, some data editing is
conducted. Only the transactions involving commodities above 1,000 Norwegian kroner (NOK)
and less than one year old are selected, and incomplete declarations are rejected. After loading,
automatic corrections are carried out, and the validity of codes is checked again. Also, with the
aid of statistical tools, probable errors are identified, which may involve unusual prices, partners
or commodities, as well as code combinations that seem suspect. All large declarations are
subject to data quality control, in which the experience of staff members specializing in the
checking of data of specific groups of commodities plays a key role;
(c) In cases where Statistics Norway does not have sufficient information to correct obvious
errors, a report is sent to customs specifying the nature of the problem with each suspect
transaction. This report is reviewed by customs and sent back to Statistics Norway with a
comment indicating whether any corrective action was taken.
28.A.13. Validation of price survey data. Validation mechanisms are also applied to price survey
data submitted to Statistics Norway. These mechanisms include detection of high and low
outliers, control of CPA classification, and checks on aggregated data at different NACE levels.
If errors are suspected and the data in the questionnaire are insufficient, Statistics Norway will
establish direct contact with the respondent in order to obtain further clarification.
28.A.14. Most frequent kinds of errors. Some of the most frequent kinds of errors detected are
related to the wrong currency and/or exchange rates, as well as errors in the quantities reported.
Two specific examples illustrate some of the kinds of errors that have been dealt with in the past.
The first case involved salmon exports to the European Union that were subject to a punitive
duty. As firms filling out the declarations were not able to report separately the duty, Statistics
Norway had to expend significant efforts to correct the statistical value. Another situation was
created by some companies using computer software to speed up the filling out of customs
declarations, which automatically distributed total quantity (weight) of all declared goods
according to their individual value shares. As a result, all commodities declared in a single
342
document were implicitly given exactly the same unit value, rendering the information useless
for unit-value calculations.
5. Institutional framework
28.A.15. Cooperation between Statistics Norway and Norway‘s customs administration. A good
working relationship exists between Statistics Norway and the Norway‘s customs administration
authority in terms of providing data for statistical purposes, as required by the Statistics Act of
1989. Cooperation between the customs administration authority and Statistics Norway is
regulated by a formal agreement, which establishes responsibility for contacts between both
parties. It stipulates that changes made to the existing administrative data systems should be
communicated to Statistics Norway, regulates data transmission between the customs
administration authority and Statistics Norway, confers on Statistics Norway the responsibility
for compiling a list of all statistical surveys being conducted, and requires a yearly report on
cooperation. As cooperation with customs personnel is essential during the data validation
process, Statistics Norway provides regular training for Customs employees, allowing for
improvements at the data source level.
343
Annex XXVIII.B.
Experience of Canada
28.B.1. Estimation formulas. Fixed (Laspeyres) and current (Paasche) weighted price indices
are calculated monthly, quarterly and annually on a customs and balance-of-payments bases for
all countries and for the United States. The International Trade Division of Statistics Canada also
calculates trade values at constant dollars on a balance-of-payments basis through use of the
chain Fisher formula with a base reference year. They are available from 1981 to the present on a
monthly and a quarterly basis.
28.B.2. Error detection and imputation. Once the Laspeyres and Paasche indices have been
calculated, a method described by Hidiroglou and Berthelot (1986) to identify outlying
observations is used by a module. The Historical Trend Method is also adopted and used to
identify transactions within an aggregation that are ―abnormal‖ for a given period. The error
detection process is carried out only at the first stage of aggregation in the construction of the
International Merchandise Trade Price Index. If a unit value is identified as an outlier during the
error detection process, and if the price analyst with the help of the subject-matter specialist also
considers this unit value an outlier, then the unit value will be imputed manually.
28.B.3. Quality evaluation. The quality of this index is maintained by the few trained analytical
experts assigned to this area, who develop a thorough knowledge of the domain. Much time and
effort are devoted to detecting and following up unusual fluctuations over time in the pricing
patterns of goods. Prior to dissemination, the price indices are analysed and historic trends
reviewed.
Chapter XXIX
Seasonal adjustment
29.1. Introduction. The present chapter explains the concept of seasonal adjustment of data, its
key features and main approaches, including revision policy and quality issues in general terms.
It then provides some examples of country practices in the application of seasonal adjustments to
international merchandise trade data. It is based on IMTS 2010 (para. 11.3), which encourages
countries to compile and publish, where appropriate, seasonally adjusted monthly and quarterly
international merchandise trade data on a regular basis. It is related to chapter XXVI on
dissemination.
A. Basic concepts and uses of seasonally adjusted trade data
29.2. Need for seasonally adjusted data. Monthly and quarterly data on international
merchandise trade statistics are an important tool for economic policymaking, business cycle
analysis, modelling and forecasting. However, they are often characterized by seasonal
fluctuations and other calendar or trading-day effects, which mask other characteristics of the
data which are of interest to analysts. Seasonal adjustment is a process of estimating and
removing seasonal or calendar influences from a time series in order to achieve a better
knowledge of the underlying behaviour.
29.3. Seasonal adjustment method. Because national circumstances vary from one country to
another, no preferred seasonal adjustment method is recommended. If seasonally adjusted data
are published, it is recommended that information on the adjustment methods be provided by
countries in their metadata (IMTS 2010, para. 11.4).
29.4. Concept of seasonal adjustment. Seasonal adjustment is the process of estimating and
removing effects in a sub-annual time series that occur at about the same time and magnitude
each year, as well as calendar-related systematic effects that are not stable in annual timing,
which are often large enough to mask other data characteristics. Removing the seasonal
component allows for an easier comparison of long- and short-term movements across sectors
and countries and further contributes to an understanding of the non-seasonal behaviour which is
often of interest for economic policymaking, business cycle analysis, modelling and forecasting.
29.5. Components of time series. A time series is generally considered to consist of trend,
cycle, seasonal and irregular components. The trend, cycle and irregular components together
reflect long-term movements lasting many years, fluctuations relating to the business cycle, and
unforeseeable movements of all kinds. The seasonal component of a time series represents the
movement within the year, and includes the effect of climatic and institutional events that are
repeated regularly throughout the year, as well as calendar-related systematic effects that are not
stable in annual timing, such as trading-day and moving holiday effects. Seasonal adjustment is
the process of completely eliminating the seasonal component from the original time series.
29.6. Tools used for seasonal adjustment. Seasonal adjustment is typically accomplished with
the assistance of free and publicly available software packages, the most widespread of which
are TRAMO-SEATS (supported by the Bank of Spain) and X-12-ARIMA (supported by the
346
United States Census Bureau).294
As the seasonal component is not precisely defined, seasonal
adjustment often depends on the a priori hypotheses underlying the model chosen and upon the
software and specifications chosen.
B. Preliminary treatment of data prior to seasonal adjustment
29.7. Seasonal adjustment begins with a preliminary process of identifying and removing
outliers, adjusting for those calendar effects that are not stable in annual timing, and identifying
an appropriate decomposition type.
29.8. Graphical analysis. Preliminary treatment of the data should begin with a graphical
analysis of the series in order to identify potential problems with the data, select appropriate
parameters, and determine how to perform the seasonal adjustment. Relevant preliminary
graphical analysis should examine the length of the series, the presence of strange values, the
structure of the series, the presence of possible breaks in seasonality, and the decompositions
scheme.
29.9. Outliers. Since most seasonal adjustment methods use procedures and filters that are
sensitive to outliers, these should be identified and removed before estimating the seasonal
components. Outliers clearly due to errors in the data should be discarded. However, since
outliers not due to error typically contain information about key events, these should be
reintroduced into the data after seasonal adjustment.
29.10. Calendar effects. Calendar effects are regular effects that do not necessarily occur in the
same month or quarter each year but that can be identified and removed from the series. These
effects include holidays whose exact timing shifts systematically each calendar year and the
variation in the number of times each day of the week occurs in a given month or quarter. These
effects must be corrected for using standard seasonal adjustment tools, so as to prefent mis-
specification of the model or a compromising of the overall quality of seasonal adjustment. The
decision to correct for other effects, such as temperature, school holidays or bridge holidays,
should be made on a case-by-case basis.
29.11. Decomposition. The decomposition scheme specifies how the trend-cycle, seasonal and
irregular components combine to form the original series. Additive decomposition assumes that
the components of the time series behave independently of each other. In particular, the size of
the seasonal oscillations is independent of the level of the series. Multiplicative decomposition,
often chosen by default in seasonal adjustment software packages, assumes that the components
of the series are interdependent and thus that the size of the seasonal variation increases and
decreases with the level of the series.
294
X-12-ARIMA is based on moving averages and includes a time-series modelling component, the ability to
produce multiplicative as well as additive seasonal adjustment, and systematic removal of calendar effects. In July
2012, the United States Census Bureau released X-13ARIMA-SEATS which it developed in collaboration with the
Bank of Spain (see http://www.census.gov/srd/www/x13as/), which integrates an enhanced version of X-12-ARIMA
with an enhanced version of SEATS.
347
C. Seasonal adjustment
29.12. Choice of seasonal adjustment approach. TRAMO-SEATS and X-12-ARIMA are
currently the most commonly used seasonal adjustment approaches. TRAMO-SEATS is based
on a parametric approach (where the model structure is specified a priori), while X-12-ARIMA
is based on a non-parametric approach (where the model structure is determined from the data).
A third possible approach is to use structural time-series models, provided that they allow for a
complete calendar and outlier treatment and include an adequate set of diagnostics. The
consistent use of a common set of seasonal adjustment packages will improve transparency and
comparability of seasonally adjusted time-series across countries.
29.13. Seasonal adjustment and consistency with annual data. Annual trade totals based on
seasonal adjustment will not automatically (or conceptually) be equal to the corresponding
annual trade totals based on unadjusted data. Specifically, the annual totals of the unadjusted
series and the seasonally adjusted series will be equal only when the series are adjusted
additively, the seasonal pattern is fixed from one year to the next, and there are no trading-day
adjustments. The impact of working days, moving holidays and other calendar effects change
from one year to the next. Moving seasonality also implies that the impact of the seasonal effect
will vary across years. Nonetheless, the process of ensuring that seasonally adjusted values sum
to their unadjusted annual values, known as benchmarking, can be conducted using seasonal
adjustment software.
29.14. Direct versus indirect seasonal adjustment. Direct seasonal adjustment is performed if all
time series, including aggregates, are seasonally adjusted on an individual basis. Indirect
seasonal adjustment is performed if the seasonally adjusted estimate for a time series is derived
by combining the estimates for two or more directly adjusted series. Indirect seasonal adjustment
should be preferred when the component series that makes up the aggregate series have both
distinctively dissimilar seasonal patterns and adjustments of good quality. Direct seasonal
adjustment should be the approach of choice when the corresponding series have similar
seasonal patterns and summing the series may reduce the amount of unexplained variation.295
D. Revision policies
29.15. Reasons for revisions to seasonally adjusted data. Revisions of seasonally adjusted data
occur for two main reasons. Seasonally adjusted data may be revised as the consequence of a
revision of the unadjusted data, which may be the result of an improvement in the information
set. Revisions of seasonally adjusted data can also occur because of a better estimate of the
seasonal pattern due to new information provided by new unadjusted data and to the
characteristics of the filters and procedures for removing seasonal and calendar components. The
challenge is to strike a balance between the precision of seasonally adjusted data and their
stability over time. Revisions of seasonally adjusted data should be carried out in accordance
295
Note that optimal direct seasonal adjustment does not preserve additivity; however, it is in general a good
practice to give priority to obtaining the best seasonal adjustment of individual series, rather than maintaining
additivity. See, e.g., Bank of England, ―Prospective change in seasonal adjustment methodology: consultation with
users-summary of responses‖, Bankstats (Monetary & Financial Statistics) Articles, February 2003. Also available
from http://www.bankofengland.co.uk/statistics/ms/articles.htm.
348
with a coherent, transparent and officially announced revision policy, and should not be more
frequent than the revisions to the raw data. In this regard, it is good practice to keep the model
specification for seasonal adjustment as stable as possible over time, and to coordinate the timing
of revisions to the model specification with the timing of major revisions of the raw data.
29.16. Trade-off between frequency and accuracy. How seasonal adjustment is carried out has
implications for the revision policies. At one extreme, there is so-called current adjustment,
which minimizes the frequency of revisions and concentrates the revisions mainly within a
predefined review period. At the other extreme, there is so-called concurrent adjustment, which
maximizes the accuracy of the adjusted data at any given point, but leads to more revisions, often
from the beginning of a series, with many of them small and moving in opposite directions. In
practice, other procedures are utilized, based on a combination of these two extreme approaches.
29.17. The decision regarding whether a changed time series should be published in its entirety
is influenced by several factors. On the one hand, there is an incentive from a methodological
perspective to treat all values identically, so as to ensure that calculations are easy to understand
and to replicate. However, it is nevertheless questionable whether a newly added figure actually
contains information relevant for significant revisions to the estimation of the usual seasonal
fluctuations in previous decades. As a means of balancing the information gain and the revision
horizon, the revision period for the seasonally adjusted data is often limited to being between
three and four years longer than the revision period for the unadjusted data (see also para. 26.15).
E. Quality of seasonal adjustment
29.18. Absence of residual seasonality. The most fundamental requirement of seasonal
adjustment is that there be no estimable seasonal effect, known as residual seasonality, still
present in the seasonally adjusted series. To detect residual seasonality and residual trading-day
effects, validation should be performed using spectral diagnostics as well as other tools included
in the seasonal adjustment packages, perhaps complemented by graphical diagnostics and
statistical tests from external statistical packages. Both TRAMO-SEATS and X-12-ARIMA
provide a wide range of quality measures and diagnostics for this purpose.
29.19. Stability and lack of bias. Other important requirements for good seasonal adjustment are
a lack of bias in the level of the series and stability of the estimates. A lack of bias implies that
the level of the seasonally adjusted series is similar to the level of the original series. Stability of
the estimates implies that the inclusion of new data into the estimation procedures will not result
in large changes in the estimates. Large revisions can indicate that the estimates are misleading
or even meaningless.
F. Specific issues
29.20. Length of series. A series that is under three years in length cannot be seasonally adjusted
accurately with either TRAMO-SEATS or X-12-ARIMA. It is possible, however, to adjust these
series using alternative, less standard, procedures. For series that are long enough to run X-12-
ARIMA or TRAMO-SEATS but remain quite short (three to seven years), some instability
349
problems can araise. Several empirical comparisons have been carried out to assess the relative
performance of X-12-ARIMA and of TRAMO-SEATS on short time-series.
29.21. Seasonal adjustment of shorter series. It is good practice to evaluate the results of
seasonally adjusting shorter series over an extended period before deciding whether to publish
them or not. For instance, it is important to check for consistency and reliability for each period
(monthly or quarterly). As a general rule, when the series are shorter than seven years, the
specification of the parameters used for pretreatment and seasonal adjustment has to be checked
more often (e.g., twice a year in order to deal with the higher degree of instability of such series).
29.22. Series requiring non-standard seasonal adjustment. Some series can be characterized by
highly specific features which preclude the application of standard seasonal adjustment methods.
Such features include high non-linearity296
, absence of a clear signal due to a dominant irregular
component, unstable seasonality, a high number of outliers, and heteroskedasticity.297
In such
cases, ad hoc treatment should be carried out.
G. Data presentation
29.23. Data can typically be presented in raw, seasonally adjusted, calendar-adjusted only or
trend-cycle form. The raw data contain all the characteristics of the time series. As the seasonally
adjusted data contain the trend-cycle and the irregular components, they contain the ―news‖ of
the series. Much of the discussion on trend-cycle analysis focuses on the so-called end-point
problem. Since the trend-cycle values at the end of the series are usually estimated by
extrapolation, the estimated trend-cycle for the most recent data is very uncertain and can suffer
from phase-shift298
problems. Particular care is required at turning points, where it often takes
months until the new correct direction of development appears. In addition, it is good practice to
monitor discrepancies between the trend of raw data and the trend of seasonally adjusted data
29.24. In all cases, the information contained within the press release should reflect the
principles of ensuring transparency and assisting users in making informed decisions.
H. Country examples
29.25. Example of Germany. In Germany, the seasonal adjustment of foreign trade data as well
as of other important economic indicators entails close collaboration between the Central Bank
and the Federal Statistical Office. The original data collected by the Federal Statistical Office are
seasonally adjusted and calendar-adjusted by both institutions using the same X-12-ARIMA
procedure (which represents the evolution of the well-known X-11 model developed by the
United States Bureau of the Census). As a second step, both institutions examine the results and
have to decide in common whether any of the processing parameters that are crucial for the
quality of the results have to be adjusted or not. In the case where the parameters are changed,
the calculation of seasonally adjusted figures is repeated by both institutions. In this way each
296
Non-linearity refers to a model whose variables are not written as a linear difference equation.
297 Heteroskedasticity occurs in a linear model with error terms that do not have constant variance.
298 A phase shift is the amount of horizontal change of a wave pattern from its original state.
350
institution verifies the calculation of the other. This shared approach results result in the
publication of an agreed upon product, which eliminates the risk confusing the users of trade
statistics.
29.26. Example of Italy. In Italy, monthly trade time series are seasonally adjusted by means of
TRAMO-SEATS (Windows version). In particular, intra- and extra-European Union series (at
import and at export) are adjusted directly and separately, while the series referring to total trade
(intra- and extra-European Union) at import or at export are obtained indirectly as sums of the
corresponding seasonally adjusted series, owing to the well-known aggregation problem. The
models selected by TRAMO-SEATS are revised at the beginning of a new year, but the
estimated SA coefficients are revised monthly as soon as a new observation is added to the
series. While this approach obviously implies the need for some revisions for the nearest time
lags, it gives more consistent overall-year information as compared with raw data. The selected
models are available to researcher or users on request.
29.27. Example of the United States of America. Monthly merchandise trade series are
seasonally adjusted using factors that are produced once a year during an annual revision cycle.
Factors are produced for each month of the coming 12-month period, and are revised for the
previous three years. The X-13ARIMA-SEATS program is used to analyse data series and
generate the seasonal adjustment factors. Data are aggregated into 269 total import and export
five-digit end-use commodity groupings which are examined for trading-day variation and
seasonality. The end-use commodity classification system combines data into broad categories
based on principal uses of the commodities; utilization of the system ensures methodological
consistency with quarterly adjusted balance-of-payments data. Seasonal factors are generated for
those groups that show significant predictable seasonality. The factors are used to adjust the data
in the most detailed end-use categories. These detailed adjusted data are then summed to the
one-digit end-use level for release with the monthly merchandise trade totals.
29.28. Example of Norway. In the case of monthly data, the main figures for import and export
are adjusted seasonally using X-12-ARIMA, in addition to a number of selected series at the
two-digit level of SITC. A few monthly data series at the three-digit level of SITC are also
adjusted. In the case of quarterly data, seasonal adjustments are applied to volume indices on
total imports and exports in addition to some selected series as described above in the case of
monthly figures. Norway‘s External Trade Division is assisted by one or two experts, when
needed, who support all fields dealing with seasonal adjustments in Statistics Norway. These
experts also participate from time to time in the conduct of a more in-depth evaluation of the
methods used.
